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ROOM 3603 

The Story of the 

British Intelligence Center in 

New York during World War II 

by H. MONTGOMERY HYDE 
Foreword by IAN FLEMING 

With headquarters in New York at 630 
Fifth Avenue, Room 3603, the organiza 
tion known as the British Security Co 
ordination, or B.S.C,, was the keystone 
of the successful Anglo-American part 
nership in the field of secret intelligence, 
counterespionage and "special opera 
tions/' 

The man chosen by Sir Winston 
Churchill to set up and direct this crucial 
effort was Sir William Stephenson. A 
fighter pilot in the first World War, he 
had become a millionaire before he was 
thirty through his invention of the device 
for transmitting photographs by wireless. 
The late General Bill Donovan, director 
of the Office of Strategic Services, said 
of him; "Bill Stephenson taught us all we 
ever knew about foreign intelligence." 

Sir William Stephenson has now put 
all his papers and much other relevant 
material at the disposal of H. Mont 
gomery Hyde, a member of his wartime 

(continued on back flap) 



KANSAS CITY, MO PU BLIC LI BRAR Y 



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9^-0.9388 H99r &ho-0 

Ifrde, ,Harford Montgcneiy, 

1907- 

Room 360'). farrar, Straus 

[19621 

63-19182 ., 

940.9388 H99r $4*50 
Kyd,e s Harford Montgomery , 

1907- 

Room 1603^ Farrar, Straus 
[1962] " 



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3603 



By ike same author 

THE RISE OF GASTLEREAGH 

THE EMPRESS CATHERINE AND PRINCESS DASHKOV 

LONDONDERRY HOUSE AND ITS PICTURES 

PRINCESS LIEVEN 

JUDGE JEFFREYS 

MEXICAN EMPIRE 

A VICTORIAN HISTORIAN: LETTERS OF w. E. H. LECKY 

PRIVACY AND THE PRESS 

JOHN LAW 
THE TRIALS OF OSCAR WILDE 

MR. AND MRS. BEETON 

GASES THAT CHANGED THE LAW 

CARSON 

THE TRIAL OF CRAIG AND BENTLEY 

UNITED IN CRIME 
THE STRANGE DEATH OF LORD CASTLEREAGH 

THE TRIAL OF SIR ROGER CASEMENT 

SIR PATRICK HASTINGS: HIS LIFE AND CASES 

REGENT DEVELOPMENTS IN HISTORICAL METHOD AND 

INTERPRETATION 

SIMLA AND THE SIMLA HILL STATES UNDER BRITISH 
PROTECTION 

With the Marchioness of Londonderry, D.B.E. 

THE RUSSIAN JOURNALS OF MARTHA AND 

CATHERINE WILMOT 

MORE LETTERS FROM MARTHA WILMOT: 
IMPRESSIONS OF VIENNA 

With G. R. Falkiner NuUall 

AIR DEFENCE AND THE CIVIL POPULATION 

With John Kisch 

AN INTERNATIONAL CASE BOOK OF CRIME 

In preparation 

THE LIFE OF LORD BIRKETT 



ROOM 3603 



The Story of the British Intelligence Center 
in New York during World War II 



BY 

H. MONTGOMERY HYDE 



FARRAR, STRAUS AND COMPANY 

NEW YORK 



Copyright by H. Montgomery Hyde., 1962 

Third Printing? X9&3 
Published in Great Britain as THE QUIET CANADIAN 

Library of Congress catalog card number 63-12490 



MANUFACTURED IN THE UNITED STATES OF AMERICA 



xo 
LADY STEPHENSON 



'There was established, by Roosevelt's order and despite 
State Department qualms, effectively close co-operation be 
tween J. Edgar Hoover and British Security Services under the 
direction of a quiet Canadian, William Stephenson. The pur 
pose of this was the detection and frustration of espionage and 
sabotage activities in the Western Hemisphere. ... It produced 
some remarkable results which were incalculably valuable. . . . 
Hoover was later decorated by the British and Stephenson by 
the U.S. Government for exploits which could hardly be 
advertised at the time.' 

Robert Sherwood. Roosevelt and 
Hopkins. 

'Bill Stephenson taught us all we ever knew about foreign 
intelligence.' 

General William J. Donovan, Director of 
the U.S. Office of Strategic Services. 



If it had not been for Stephenson and his organization in 
the U.S.A., there would have been many more "gold star" 
mothers in America at the end of the war.' 

Ernest Guneo 



CONTENTS 



PAGE 



FOREWORD by Ian Fleming ix 

CHAPTER 

I. PRELUDE i 

II. THE BIRTH OF B.S.C. 31 

III. SPIES, SABOTEURS AND PROPAGANDISTS 60 

IV. THE VICHY FRENCH AND OTHERS 94 
V. SPECIAL OPERATIONS 121 

VI. G.O.L AND O.S.S. 151 

VII. PROPAGANDA AT WORK 181 

VIII. FINALE 211 

SOURCES 245 

INDEX 247 



FOREWORD 
BY IAN FLEMING 



In the high ranges of Secret Service work the actual facts in many cases 
were in every respect equal to the most fantastic inventions of romance and 
melodrama. Tangle within tangle, plot and counter-plot, ruse and treachery, 
cross and double-cross, true agent, false agent, double agent, gold and steel, 
the bomb, the dagger and the firing party, were interwoven in many a texture 
so intricate as to be incredible and yet true. The Chief and the High Officers 
of the Secret Service revelled in these subterranean labyrinths, and pursued 
their task with cold and silent passion. 

SIR WINSTON CHURCHILL 



IN this era of the anti-hero, when anyone on a pedestal is 
assaulted (how has Nelson survived?), unfashionably and 
obstinately I have my heroes. Being a second son, I dare say 
this all started from hero-worshipping my elder brother Peter, 
who had to become head of the family at the age of ten, when 
our father was killed in 1917. 

But the habit stayed with me, and I now, naively no doubt, 
have a miscellaneous cohort of heroes, from the Queen and 
the Duke of Edinburgh through Sir Winston Churchill and 
on downwards to many Other Ranks, who would be surprised 
if they knew how much I admired them for such old-fashioned 
virtues as courage, fortitude, and service to a cause or a 
country. I suspect I hope that 99.9 per cent of the popula 
tion of these British islands has heroes in their family or out 
side. I am convinced they are necessary companions through 
life. 

High up on my list is one of the great secret agents of the 
last war who, at this moment, will be sitting at a loaded desk 
in a small study in an expensive apartment block bordering 
the East River in New York. 

It is not an inspiring room ranged bookcases, a copy of 
the Annigoni portrait of the Queen, the Cecil Beaton photo 
graph of Churchill, autographed, a straightforward print of 
General Donovan, two Krieghoffs, comfortably placed boxes 
of stale cigarettes, and an automatic telephone recorder that 
clicks from time to time and shows a light, and into which, 
exasperated, I used to speak indelicate limericks until asked 

ix 



to desist to spare the secretary, who transcribes the calls, her 
blushes. 

The telephone number is unlisted. The cable address, as 
during the war, is INTREPID. A panelled bar leads off the study, 
and then a bathroom. My frequent complaints about the 
exiguous bar of Lux have proved fruitless. The occupant expects 
one to come to see him with clean hands. 

People often ask me how closely the 'hero 5 of my thrillers, 
James Bond, resembles a true, live secret agent. To begin with, 
James Bond is not in fact a hero, but an efficient and not very 
attractive blunt instrument in the hands of government, and 
though he is a meld of various qualities I noted among Secret 
Service men and commandos in the last war, he remains, of 
course, a highly romanticised version of the true spy. The real 
thing, who may be sitting next to you as you read this, is 
another kind of beast altogether. 

We know for instance, that Mr. Somerset Maugham and 
Sir Compton Mackenzie were spies in the First World War, 
and we now know, from Mr. Montgomery Hyde's book, that 
Major-General Sir Stewart Menzies, K.C.B., K.C.M.G., 
D.S.O., M.C., a member of White's and the St. James's, 
formerly of Eton and the Life Guards, was head of the Secret 
Service in the last war news which will no doubt cause a 
delighted shiver to run down the spines of many fellow- 
members of his clubs and of his local hunt. 

But the man sitting alone now in his study in New York is 
so much closer to the spy of fiction, and yet so far removed 
from James Bond or Our Man in Havana, 5 that only the 
removal of the cloak of anonymity he has worn since 1940 
allows us to realise to our astonishment that men of super- 
qualities can exist, and that such men can be super-spies and, 
by any standard, heroes. 

Such a man is c the Quiet Canadian,' otherwise Sir William 
Stephenson, M.C., D.F.C., known throughout the war to his 
subordinates and friends, and to the enemy, as 'Little Bill.' 
He is the man who became one of the great secret agents of 
the last war, and it would be a foolish person who would argue 
his credentials; to which I would add, from my own experi 
ence, that he is a man of few words and has a magnetic 
personality and the quality of making anyone ready to follow 



him to the ends of the earth. (He also used to make the most 
powerful martinis in America and serve them in quart 
glasses.) 

I first met him in 1941 when I was on a plainclothes mission 
to Washington with my chief, Rear-Adiniral J. H. Godfrey, 
Director of Naval Intelligence, the most inspired appointment 
to this office since 'Blinker 5 Hall, because, when the days were 
dark and the going bleak, he worked so passionately, and made 
his subordinates do the same, to win the war. Our chief busi 
ness was with the American Office of Naval Intelligence, but 
we quickly came within the orbit of 'Little Bill 5 and of his 
American team-mate, General c Wild Bill 3 Donovan (Con 
gressional Medal of Honor), who was subsequently appointed 
head of the O.S.S., the first true American Secret Service. 

This splendid American, being almost twice the size of 
Stephenson, though no match for him, I would guess, in 
unarmed combat, became known as c Big Bill, 3 and the two 
of them, in absolute partnership and with Mr. J. Edgar Hoover 
of the F.B.L as a formidable fullback, became the scourge of 
the enemy throughout the Americas. 

As a result of that first meeting with these three men, the 
D.N.I, reported most favourably on our Secret Service tie-ups 
with Washington, and c Little Bill,' from his highly mechanised 
eyrie in Rockefeller Center and his quiet apartment in Dorset 
House, was able to render innumerable services to the Royal 
Navy that could not have been asked for, let alone executed, 
through the normal channels. 

Bill Stephenson worked himself almost to death during the 
war, carrying out undercover operations and often dangerous 
assignments (they culminated with the Gouzenko case that put 
Fuchs in the bag) that can only be hinted at in the fascinating 
book that Mr. Montgomery Hyde has, for some reason, been 
allowed to write the first book, so far as I know, about the 
British secret agent whose publication has received official 
blessing. 

'Little Bill 3 was awarded the Presidential Medal for Merit, 
and I think he is the first non-American ever to receive this 
highest honour for a civilian. But it was surely e the Quiet 
Canadian's 3 supreme reward, as David Bruce (today American 
Ambassador to the Court of St. James's, but in those days one 



XI 



of the most formidable secret agents of the O.S.S.) records, 
that when Sir Winston Churchill recommended Bill Stephen- 
son for a knighthood he should have minuted to King George 
VI, 'This one is dear to my heart.' 

It seems that other and far greater men than I also have 
their heroes. 



xn 



ACKNOWLEDGEMENTS 

VARIOUS people on both sides of the Atlantic have helped me 
to produce this book, and my obligation to them is great. 

Not only has Sir William Stephenson put his files and 
private papers unreservedly at my disposal, but he has shown 
limitless patience and good humour in answering a multitude 
of harassing questions which I have put to him. To Lady 
Stephenson, too, I am grateful for many kindnesses, not least 
of which has been the friendly hospitality of their New York 
apartment, where the book originated and took shape. 

However, I must make it clear that I accept complete 
responsibility for its contents. 

Others in New York have made useful contributions, 
notably Mr. Ernest Cuneo, Mr. John Pepper, Mr. Sydney 
Morrell and Mr. David Ogilvy; also Mr. Thomas Drew- 
Brook in Toronto. My thanks are due to them in full measure. 

In London, Colonel C. H. Ellis has read the book in manu 
script and has made suggestions which have improved it in 
many ways. His experience and knowledge of the intelligence 
background of the story have been invaluable. For their help 
in various ways I would also thank Mr. Ian Fleming, Mr. 
Ingram Fraser and Miss A. M. Green. 

The book was first published in England under the title 
The Quiet Canadian. A few minor changes and some additions 
to the original text have now been made in the interests of 
accuracy and clarity. Mr. Ian Fleming's Foreword, for which 
I am particularly grateful, did not appear in the British 
edition. 

H. M. H. 

Nutley, Sussex, England 

January, 1963 



xiu 



3^03 



CHAPTER I 



PRELUDE 



ONE day in the spring of 1945, when the end of the war with 
Hitler was in sight, Mr. J. Edgar Hoover, head of the United 
States Federal Bureau of Investigation, sat dictating letters to 
his secretary in his office in the Department of Justice building 
in Washington. For the past four years, Mr. Hoover as Director 
of the F.B.I, had been charged not only with the ordinary work 
of criminal investigation in the United States of America, for 
which his Bureau had always been responsible, but also with 
counter-espionage and other secret intelligence activities which 
he and his agents carried out on behalf of the U.S. Government 
against the common enemy. Now he had learned that his close 
collaborator on the British side, a Canadian named William 
Stephenson, had been knighted for his services by King George 
VI in Buckingham Palace, and so among the letters which, went 
out under the Director's signature on that particular day in 
March, 1945, was one to Sir William Stephenson, M.C., D.F.C. 
After congratulating him on this honour which in his view was 
'both well earned and well deserved', the F.B.I, chief remarked 
that in the years to come Stephenson could certainly look back 
with great satisfaction to the 'very worthy contribution' which 
he had made not only to his own country but to those of the 
Allies in this world conflict. 'When the full story can be told', 
Mr. Hoover added, 'I am quite certain that your contribution 
will be among the foremost in having brought victory finally to 
the united nations' cause.' 

Coming from a man in the unique position of Edgar Hoover, 
who was familiar with the whole pattern of enemy activities in 
the Americas, this was a most remarkable tribute, particularly 
to the citizen of another country. At the time Hoover wrote, 
the name of William Stephenson was scarcely known outside a 



few select Government and business circles on either side^of the 
Atlantic. The picture which did occasionally emerge into a 
slightly wider field was that of a mysterious millionaire, who 
had been highly decorated for his gallantry as a flier in ^ the 
First World War and was now engaged by the British authorities 
on work of a 'top secret' character which went far beyond his 
ostensible duties of devising and executing security measures 
for the protection of British shipping and cargoes of war material 
plying between America and Britain. 

Apart from the peculiar war-time conditions under which he 
worked and which made secrecy essential, Stephenson has 
always deliberately shunned publicity, and even today the total 
of newspaper cuttings about him and his fantastic career barely 
covers half a dozen pages of foolscap. Yet his was the master 
mind which directed a vast range of vitally important secret 
operations for Britain throughout the Western Hemisphere, 
and at the same time showed the Americans, when the time 
came, how to build up their own successful intelligence service 
and 'special operations'. This latter achievement led President 
Truman to award him the country's highest civilian decoration, 
the Medal for Merit, Stephenson being the first and until then 
the only non-American to have received this coveted distinc 
tion. As General William ('Wild Bill') Donovan, head of the 
American Office of Strategic Services (O.S.S.), put it Donovan 
was if anything closer to Stephenson than was Edgar Hoover 
during these momentous years 'Bill Stephenson taught us all 
we ever knew about foreign intelligence'. 

At last, after the lapse of two decades, it is possible to lift the 
veil and reveal something of these astonishing activities and of 
the Canadian business man who directed them from the thirty- 
sixth floor of a skyscraper office building in New York. 

Towards the middle of 1940, when France was on the verge 
of defeat and Britain stood virtually alone against the victorious 
Nazis, Stephenson had arrived in New York entrusted by the 
Chief of the Secret Intelligence Service in London with the task 
of collecting information on enemy activities aimed against the 
continuance of Britain's war effort and planning appropriate 
counter-measures. He was also invited by Mr. Churchill, who 
had just become Prime Minister, to exert his efforts among his 
business and other contacts in the United States to help Britain 



in her hour of desperate need with essential supplies, and like 
wise to do all he could to promote a climate of public opinion 
favourable to American intervention on the side of Britain. 
Stephenson had been quick to realize that the mere collection 
of secret intelligence of enemy activities would be quite inade 
quate in the prevailing situation and that other secret activities 
particularly of an offensive nature would have to be undertaken. 
This involved the co-ordination of a number of functions falling 
within the jurisdiction of different Government departments in 
London such as the Ministries of Information, Economic War 
fare, Supply and War Transport, and the Intelligence branches 
of the armed forces, all of which Stephenson represented in his 
official capacity. Hence the name British Security Co-ordination 
(B.S.C.), by which his organization was officially known, a 
name which incidentally was first suggested by Edgar Hoover. 
On the offensive side, Stephenson and his B.S.C. were 
responsible for the training of hundreds of American and 
Canadian agents who made successful parachute landings in 
occupied Europe. His communications experts were able to 
intercept and decode the radio signals of enemy submarines, 
pinpointing their positions so that they could be destroyed by 
allied naval action. In the sphere of counter-espionage he was 
able to furnish extremely important information through 
British censorship intercepts and other sources, which resulted 
in the arrest and trial of a number of key German agents in the 
United States. He was similarly able, through his own agency 
* network, to render harmless the activities of a vast German 
sabotage ring in Latin America, as well as to expose the dummy 
companies operated in various parts of the world by the power 
ful German industrial cartel of I.G. Farben. Stephenson also 
played a part in the 'destroyers for bases' deal with the United 
States which gave Britain much-needed convoy protection for 
her supplies in the crucial months following the Dunkirk 
evacuation and the fall of France, just as he was involved in a 
subtle manoeuvre which delayed Hitler's attack on Russia by 
six vital weeks. In the penetration of enemy and unfriendly 
diplomatic missions in the Western Hemisphere and the dis 
covery of their secret codes and ciphers, B.S.C. was particularly 
adept, as also in the delicate operation of discrediting their staff 
members through their individual indiscretions. Stephenson's 



4 

discoveries of this kind among the Vichy French representatives 
in the United States were passed on to President Roosevelt, 
who considered them e the best bed-time story' he had read 
since the last war. Finally although this concerned a different 
type of enemy who was in fact a military ally at the time 
Stephenson personally played a most significant part in the 
chain of events which followed the defection of Igor Gouzenko, 
the cipher clerk in the Soviet Embassy in Ottawa in September, 
1 945, and which revealed the existence of a widespread espionage 
network including the first 'atom spies' under the direction of 
the Russians in North America. 

Of course, all this necessitated the employment of a consider 
able staff both at headquarters and in the field. At one time 
about a thousand men and women worked for Stephenson's 
B.S.C. in the United States and about twice that number in 
Canada and Latin America. All these employees were paid by 
the British Government. Stephenson took nothing in the way of 
remuneration for himself. Much was heard at the time about 
the 'dollar a year' men, wealthy American business executives 
who undertook various key jobs in the prosecution of their 
country's war effort. But Stephenson did not accept even a 
dollar a year. On the other hand, he contributed largely to the 
common cause out of his own pocket. When peace came, he 
had spent close on one million dollars of his personal fortune in 
this way. 

He seldom left his New York headquarters except to fly to 
Washington to see people like Hoover and Donovan who had 
their headquarters there, or to cross the Atlantic to report 
progress to the Prime Minister and the various departments 
represented by B.S.C. He was probably not known, even by 
sight, to more than a fraction of his carefully selected head 
quarters staff. But those who did know him held him in admira 
tion and indeed affection, for he was a patient and understand 
ing chief who gave his subordinates their heads and invariably 
stood by them when they got into trouble, as sometimes 
happened through excess of zeal or some other cause. 

William Stephenson was forty-four years old when he assumed 
the immense task of co-ordinating and directing British security 
intelligence and 'special operations' in the Americas. What 
those who knew him at that period recall was a small, slim, 



erect figure with the springy walk that boxers have. (He had 
boxed in his youth indeed he was a former amateur light 
weight world champion and it was his interest in the sport 
which later introduced him to Gene Tunney, the undefeated 
American champion, who in turn introduced him to Hoover.) 
What you noticed when you first met Stephenson was a ruddy 
complexion, crisp greyish hair, a pair of most penetrating eyes, 
a soft speaking voice with hardly a trace of accent, and, as one 
observer accurately noted, a mouth that slipped easily into a 
wry grin. Although he could argue with conviction and even 
eloquence, as a rule he preferred the other chap to do the 
talking at an interview, a characteristic which prompted the 
American dramatist Robert Sherwood to describe him as *a 
quiet Canadian 9 . Not that he was in the least unsociable. His 
capacity for absorbing dry Martinis was astonishing, the more 
so as they never seemed to have the slightest effect upon him. 
To his intimates he was known affectionately as 'Little Bill 9 
to distinguish him from 'Wild Bill 5 Donovan who was c Big 
Bill 9 . 

In recommending William Stephenson for the award of the 
Medal for Merit in a citation which he personally composed and 
sent to the White House for the President's approval, General 
Donovan referred to the 'timely and valuable aid 9 which the 
Director of British Security Co-ordination had given the Ameri 
can effort by making available to the United States the 'exten 
sive experience of the British Government 9 in the fields of 
Intelligence and Special Operations. 'At every step in the 
creation of these instrumentalities 9 , the citation continued, 'Sir 
William contributed assistance and counsel of great value both 
to the Government of the United States and to the entire allied 
cause. In a duty of great responsibility he worked tirelessly and 
effectively . . . 9 



Stephenson grew up in Winnipeg, the capital of Manitoba and 
the chief city of Western Canada, where his father had a 
lumber mill. Situated on the eastern border of the prairies 
in the middle of a narrow belt between Lake Winnipeg and the 
boundary line with the United States, the city enjoys a unique 



geographical position for purposes of trade, since it is the natural 
centre of all commercial intercourse between the eastern and 
western parts of the country. At this period the population of 
Winnipeg was rapidly increasing, thus keeping pace with the 
town's mounting industrial prosperity. In 1870, when it still 
belonged to the Hudson's Bay Company, the place had been no 
more than a fur trading post with a couple of hundred inhabi 
tants; by the turn of the century, after the settlement and its 
surrounding territory had been taken over by the Dominion 
Government, there were over 40,000 living in Winnipeg; and 
when Stephenson went off" to join the Canadian army at the 
outbreak of the First World War, the local population was 
approaching the 200,000 mark. With its big lumber and flour 
mills Winnipeg was thus the scene of great industrial and 
commercial expansion at this period and at the same time of 
intense business competition and individual rivalries. Sur 
rounded as it was by lakes, woodland and prairie, Winnipeg in 
those days was an ideal place, with its long and severe winters, 
in which to cultivate the qualities of hard work, thrift and self- 
reliance, and young Stephenson was seldom idle. 

William Samuel Stephenson was born at Point Douglas, 
just outside Winnipeg, on January u, 1896. (He was called 
William after his father, Samuel after an old family friend.) It 
was here, at the junction of the Assiniboine and Red rivers, 
that Thomas Douglas, Earl of Selkirk, and his Scottish High 
landers had established the first British settlement in the name of 
the Hudson's Bay Company towards the end of the Napoleonic 
Wars. And it was at Point Douglas that the elder Stephenson, 
who was descended from one of the early Scottish settlers, had 
his lumber mill, and that his son spent his boyhood. Here the 
lad liked to tinker around with anything mechanical he could 
lay his hands on. Fortunately Winnipeg, through the foresight 
and benevolence of its leading citizens, possessed some of the 
best schools in the country, and it was to one of them, the Argyle 
High School, that Bill Stephenson was in due course sent. At 
this academy his education, as befitted the place and the times, 
was thorough rather than elegant. He showed himself a willing 
learner, excelling especially in mathematics and in all kinds of 
handicrafts. Outside the classroom his tastes ran to boxing and 
he was a creditable light-weight performer in the school boxing 



ring, although nobody took him at the time for a future amateur 
world champion. 

Stephenson was still at the Argyle High School in Winnipeg 
when German troops invaded Belgium in August, 1914, and 
the First World War began. He went straight from school into 
the Royal Canadian Engineers. Before his nineteenth birthday 
he had received his commission as a Second Lieutenant, and a 
few months later he was fighting in the trenches in France. 
Soon he was promoted Captain. Towards the end of 1915 he 
was badly gassed and invalided back to England. While con 
valescing he determined to learn to fly and he accordingly 
applied for a transfer to the Royal Flying Corps. His applica 
tion was granted in due course and he received his 'wings* at 
the R.F.C. station at South Carlton, Lincolnshire, and some 
time in 1916 he reported for duty with No. 73 Squadron of 
the R.F.C. in France. A stockbroker from Toronto named 
Thomas Drew-Brook was orderly officer at the time and he 
has recalled that Stephenson looked extremely pale and 
delicate when he arrived, for he was still suffering from the 
after-effects of German gas. In fact, Drew-Brook doubted 
whether he would ever do much as a fighter pilot and he 
privately advised his Flight Commander that he should be 
posted to a reserve flight. 

There were two Flight Commanders in 73 Squadron and 
Stephenson himself quite soon became one of them. The other 
was Captain A. H. Orlebar, a most skilful and daring fighter 
pilot, for whom Stephenson always had a particular admira 
tion and with whom he enjoyed a friendly rivalry in 
operations. 

For some time Stephenson did nothing spectacular. He was 
always where he should be, but he certainly did nothing to call 
attention to himself. Then one day during the March offensive 
in 1918 he was out on a flight in a Sopwith Camel and a couple 
of German fighters got on his tail, shooting up his machine so 
badly that he was only able to come in to land with the greatest 
difficulty and at the risk of his life as his machine was more or 
less out of control. The small pale-faced figure which emerged 
from the cock-pit appeared 'hopping mad' and ready to take on 
the entire German Air Force, as his friend Drew-Brook also 
recalls. He immediately got into another machine and insisted 



8 

on returning to action. The next the squadron heard of him 
was that he had brought down two German fighter planes in 
flames. 

From then on there was no holding him. During the next 
few weeks he destroyed eighteen more enemy machines and 
two kite balloons. Three of the planes came down in the Allied 
Lines, and one of them he forced to within a mile of his own 
aerodrome, having had a bet in the mess on the previous even 
ing that he 'would bring a Hun back for breakfast'. His victims 
included Lothar Von Richtofen, brother of the famous German 
air e ace' Baron Von Richtofen. It was said of Stephenson at the 
Battle of Chateau Thierry that he literally lived in the air' over 
the River Marne and with thousands of well-placed machine- 
gun bullets was largely instrumental in preventing the enemy 
sappers from rigging their pontoons for the river crossing. 'You 
can always know when Steve is over', said a Canadian 'Tommy' 
who experienced the horrors of the Front Line. 'He comes right 
down to wave "Hello" and never forgets the boys on the ground 
when things are hot.' These exploits gained for him the Military 
Cross and Distinguished Flying Cross, while the French awarded 
him the Legion of Honour and the Croix de Guerre with palm. 

At this time his proficiency in boxing had become remarkable, 
and at Amiens, early in 1918, as Royal Flying Corps member 
of the Inter-Services Boxing Teams he won the amateur light 
weight championship of the world. Because of his punch 
ing speed in the ring, he was known as 'Captain Machine 
Gun'. 

The episode of gallantry which brought him the high military 
decoration from the President of France also unfortunately 
brought him to grief behind the German lines. On the afternoon 
of July 28, 1918, Stephenson, by this time a Flight Com 
mander, decided to go up on a lone patrol, since the regular 
scout patrols had been cancelled owing to stormy weather. 
Through a gap in the clouds he suddenly saw a French recon- 
naisance two-seater aircraft being attacked by seven Fokker 
planes. Without a moment's hesitation he dived through the 
clouds and attacked the leader of the enemy formation, shooting 
down his machine in flames. Then followed a terrific dog fight' 
in which Stephenson made brilliant tactical use of the clouds 
and succeeded in bringing down another Fokker, while a third 



was sent spinning towards the ground out of control. The 
remainder thereupon made off. Then, so as to make sure that 
the observer of the French plane recognized the markings on 
his own machine, he flew right alongside the reconnaisance 
aircraft. Unfortunately the observer who saw him out of the 
corner of his eye mistook him for a German and fired a machine- 
gun burst into Stephenson's aircraft which put the engine out 
of action and wounded the pilot in the leg. 

Stephenson managed to land just in front of the German 
Front Line, crawled out of the damaged machine, and in spite 
of his wounded leg tried to reach the British lines. This time an 
enemy machine-gunner hit him again in the same leg, and this 
completely incapacitated him. He was immediately surrounded 
by the enemy and taken prisoner. In due course he was sent to 
the prisoner-of-war camp at Holzminden on the River Weser 
near Brunswick. Here he was joined by his friend Tommy Drew- 
Brook, who had been captured about the same time. 

Only those who have experienced living behind barbed wire 
can realize how extremely boring the life of a prisoner-of-war 
can be. The unfortunate inmates of Holzminden were no 
exception and they found little with which to occupy them 
selves besides playing games and concocting plans to escape. 
One of the games at Holzminden, which is really self-explana 
tory, was known as 'Beat the Hun 5 ; it consisted of getting the 
better of the camp guards 3 usually by the acquisition of some 
German property. If you were smart enough to get away with 
anything, even if it were only a potato', Drew-Brook later 
recalled, 'this could provide a topic of conversation and a feel 
ing of achievement for at least a day!' 

The camp commandant was a certain Hauptman Niemeyer, 
who bore a remarkable physical resemblance to the Kaiser. 
When Stephenson eventually succeeded in escaping from 
Holzminden, which he did in October, 1918, a few weeks before 
the Armistice, and in making his way back to his squadron in 
France, he deliberately purloined a photograph of the com 
mandant from the latter's office, under the noses of the camp 
guards, and took it with him on his escape journey. It was, he 
said, a last gesture of contempt for his captors. He still has that 
photograph. 

At the time of his demobilization William Stephenson, then 



10 



in his early twenties, foresaw the coming of commercial wireless 
and even television on a nation-wide scale, and that he deter 
mined to apply his inventive talents in this lucrative field. For 
a time he returned to Winnipeg, where his family still lived, 
but neither in Canada nor across the border in the United 
States could he find the opportunities he sought in his chosen 
field of radio, despite the current boom in broadcasting. The 
United States were, of course, the pioneers in large-scale^broad- 
casting and it was there that the new medium first received its 
name. Soon large numbers of stations of varying power were 
c on the air 3 , while a multiplicity of radio firms sprang up and 
placed on the market both complete receiving apparatus to 
meet the differing requirements of the various stations and the 
components necessary for assembling the sets in the listeners' 
homes. One result of the haphazard erection of transmitters 
was to produce considerable interference between locally over 
crowded stations, while large tracts of the country were either 
badly served or not at all. Canada, on the other hand, while 
following the example of the United States, did so on a much 
smaller scale and with a greater regard for interference diffi 
culties that might arise. In particular, the operation of the 
station at Winnipeg by the Government of Manitoba was a 
unique phenomenon, which attracted Stephenson's attention, 
the more so as the example of Manitoba was shortly to be 
followed in Britain. 

Late in 1922, the British Broadcasting Company was formed 
in London by the leading wireless manufacturers and traders 
in the country, and early in the following year the new company 
received a licence from the Postmaster-General which conferred 
upon it the exclusive right to broadcast programmes in Britain. 
The company as such neither manufactured, sold nor recom 
mended apparatus, and its revenue, like that of the Winnipeg 
station, was derived from a share in the receiving licences 
levied by the Government. Nevertheless the British radio 
industry, then in its infancy, had an obvious interest in the 
success of the new venture; indeed it was to insure a ready 
market for their products that its leading firms had originally 
combined to form the B.B.C. The publicity manager of one of 
these firms was a young Canadian known to Stephenson, 
William Gladstone Murray, a daring combatant flier like 



II 

himself in the war and a former air correspondent of the 
Canadian Lord Beaverbrook's Daily Express newspaper. 
Gladstone Murray now became the BJB.C.'s first Director of 
Public Relations as well as a good friend to Stephenson. 

It was with the primary aim of looking into the extended 
possibilities of radio manufacture and research created by these 
developments that Stephenson decided to revisit London. He 
planned only a short trip. In fact he was to remain in England 
for most of the next nineteen years and to make his home there, 
while his peculiar inventive and commercial genius transformed 
him into a millionaire. 



What struck Stephenson most of all about broadcasting on his 
arrival in England in 19521 was the relatively slow response of 
the public to its attractions. The primary need was a complete 
range of wireless receiving apparatus for popular use at a moder 
ate cost, which he now made up his mind to stay in England and 
provide. With a little capital which he had succeeded in raising, 
he now bought an interest in two companies, the General Radio 
Company Limited and the Cox-Cavendish Electrical Company 
Limited, both engaged in the manufacture and marketing of 
broadcasting and other electrical equipment including X-ray. 
Within an astonishingly short time the cheap and popular 
radio sets manufactured by the General Radio Company were 
in thousands of homes throughout Britain. 

Stephenson now turned his attention towards the solution of 
an extremely important kindred problem of radio technology, 
namely the transmission by wireless of pictures, both still and 
moving. For the past thirty years, it had been possible to trans 
mit a wireless photograph by splitting it up into small sections, 
each section being denoted by a letter of the alphabet or a 
number to indicate the appropriate degree of light or shade. 
But this method always remained unsatisfactory pictorially, 
although it had been subject to a number of improvements over 
the years. It was now borne in upon Stephenson that an actual 
photograph could only be sent over the air with absolute accur 
acy if the picture itself operated the transmitting installation. 
And this was precisely what Stephenson proceeded to invent. 



12 

The London Daily Mail, which then enjoyed the largest 
circulation of any national newspaper in the world, was 
naturally interested in wireless photography and in fact had 
been conducting research in the subject since 1 908. This journal, 
whose dynamic founder Lord Northcliffe, shortly before his 
death, had had his attention drawn to Stephenson as a brilliant 
young scientist, now agreed to furnish Stephenson with assis 
tance on the photographic side in the shape of a well-known 
research chemist, Professor T. Thorne Baker, who joined 
Stephenson in the General Radio Company's laboratories at 
Twyford. The results of this collaboration were to revolutionize 
pictorial journalism and also point the way to commercial 
television. 

The element generally used at that time to convert light into 
electric currents which could be transmitted over wires or by 
wireless telegraphy was selenium. Unfortunately it had one 
great disadvantage, namely its relatively slow action. After long 
and detailed experiments Stephenson succeeded in producing a 
substitute for selenium in the shape of what he described as a 
light sensitive device 3 , which greatly increased the rate of 
transmission while at the same time providing a completely 
faithful image. 'This photograph was transmitted by our 
method in twenty seconds', he said to a caller as he held up a 
small picture with a parallel line effect reminiscent of a fine 
half-tone reproduction on the cinema screen. The broadcasting 
of moving pictures, he went on, was now no longer a fantastic 
dream. 'It is only a question of speeding up the apparatus to 
reduce the twenty seconds to" the time necessary for the persis 
tence of vision/ 

The Daily Mail, in publishing the first picture transmitted by 
this novel process in December, 1922, hailed the young inventor 
as c a brilliant scientist* and his discovery as *a great scientific 
event'. 1 It went on to describe its implications in the following 
words: 

Wireless photography is now an accomplished fact. That is 
to say, an actual photograph can now be made to operate a 
wireless transmitting apparatus in such a manner that the 
photograph is reproduced on a sensitive film at some distant 

1 Daily Mail, December 27, 1922. 



13 

station. One of the goals toward which inventors have been 
working for more than half a century, ever since the trans 
mission of signals by the ordinary telegraph became possible, 
has been reached; and a new era in illustrated journalism is 
beginning. The wireless tape machine can now, automatically 
and without the intervention of a human operator, tick out an 
exact reproduction of a photograph at a distance. 

As well as professional and business success, Stephenson was 
to experience deep personal happiness at this time. He became 
engaged to be married to a charming American girl from 
Tennessee, Miss Mary French Simmons, whom he had met on 
board ship and whose home was in Springfield, Tennessee. 
A woman of an innately sweet disposition, kind and gentle, 
Mary Simmons was the ideal wife for a man of Stephenson's 
restless energy, carefully watching over his health and sus 
taining him in his many-sided and arduous activities by her 
sympathy and forbearance. The marriage took place in the 
South Kensington Presbyterian Church in London on July 22, 



Mary Simmons was comparatively well-off in her own right, 
since her father was a rich tobacco exporter in Tennessee. 
But Stephenson had no need of his wife's money. The patents 
which he took out to protect his wireless invention proved a 
gold mine. For the eighteen years of their duration they 
brought him an average sum of 100,000 annually in royalties. 
Thus by the beginning of 1926, when he celebrated his thirtieth 
birthday, William Stephenson was worth a million dollars. 
By the early nineteen- thirties he centrolled a score of companies 
from an impressive office in St. James's Street and he had a 
house in fashionable New Cavendish Street as well as an 
attractive country place and farm in the Chilterns, in both 
of which he and his wife entertained on a generous scale. 

While absorbed in scientific research and development in the 
field of electronics Stephenson was 'somewhat paradoxically' 
(to use his own words) boxing actively to retain his title of 
amateur light-weight world champion. Indeed, his career as an 
amateur boxer was most spectacular and when he finally 
retired from the ring in 1923, he was undefeated. 

He also kept up his interest in flying, and incidentally his 
friendly rivalry with his former fellow Flight Commander in 



14 

73 Squadron, Captain Orlebar. In 1929, Orlebar won the 
Schneider Trophy for Britain breaking the world's previous 
speed record in the air with an average speed of 357.7 m.p.h. 
He did this in a Supermarine Special, the prototype for the 
military version which was to become the renowned Spitfire in 
World War II. 1 

In 1934 Stephenson won the King's Cup air race with a 
machine piloted by Captain H. M. Schofield which had been 
designed and built in one of his factories. General Aircraft 
Limited. This was the Monospar, a twin-engine low-wing 
monoplane. Its performance on this occasion made such 
an impression on Lord Londonderry, then Air Minister and 
himself an enthusiastic pilot it could fly and climb on one 
engine, an unheard of achievement at that time that he im 
mediately ordered one for his private use, an incident well 
remembered by the present writer as he frequently flew in it 
with the Minister at the controls. One of the first objects which 
meets the eyes of any visitor to Sir William Stephenson's New 
York apartment today is the gold cup which he received at the 
hands of King George V as the winner of the classic contest of 
the air. 

Another of Stephenson's companies was Sound City Films, 
which produced over half of the total output of British films at 
this period in its Shepperton studios. Then there was Earls 
Court Ltd., which was responsible for the erection of the world's 
biggest stadium and exhibition hall in the London district of 
that name; there was Catalina Ltd., one of the first manu 
facturers of plastics in the United Kingdom; and last but by no 
means least there was Pressed Steel, the Company which made 
ninety per cent, of the car bodies for such British firms as Morris, 
Humber, Hillman and Austin. With these and other concerns 
in which he was interested, such as Alpha Cement, he did 
business in five continents and was in touch with the world's 
leading bankers and financiers. He travelled widely in Europe 
and Asia meeting Prime Ministers, ambassadors and indus 
trialists of foreign countries, and with the Aga Khan and the 
Nawab of Bhopal he helped to underwrite schemes for the 
development of backward areas and the raising of standards 

1 Orlebar was promoted Air Commodore and served as Deputy Chief of 
Combined Operations in World War II. He died in 1943. 



of living among native peoples in the Middle East and India. 
This he regarded from every point of view as the most rewarding 
field for the investment of capital overseas. 

In this context Stephenson headed a mission of highly 
qualified technical experts to India in 1934 to investigate the 
prospects for the development of local natural resources and 
industry. Besides Stephenson, the mission included Henry G. 
Acres, a fellow Canadian and internationally known hydro 
electric engineer, the American geologist Eugene Dawson, the 
English chemical engineer Robin Edgeworth-Johnson, and 
another fellow Canadian, Colonel Beverley MacDonald, a civil 
engineer and expert on railway and docks construction. This 
high-powered mission concentrated its attention on Bhopal and 
Kashmir, two of the principal Muslim states in the sub-continent. 

The Nawab of Bhopal was Chancellor of the Chamber of 
Native Princes in India at this time and as such was interested, 
along with the late Aga Khan, in promoting the prosperity of 
the whole country. He and Stephenson became close friends 
and were to correspond regularly until his death. 1 It began 
with the Nawab's openly professed admiration of Stephenson 5 s 
skill with the rifle in the tiger and panther shoots, which the 
Nawab organized for the mission. After one of these shoots, the 
Nawab wrote to his friend, Lord Southborough in London: 
'Stephenson is certainly the best shot I have ever had the honour 
to have as my guest. How the Begum would have loved to be 
with us on the shikaris! 5 

It was his connection with the Pressed Steel Company that 
first led Stephenson into the field of secret intelligence. In the 
course of the business trips which he made to Germany at this 
period in order to buy steel, he soon discovered that practically 
the whole of the German steel production had been turned 
over to the manufacture of armaments and munitions, although 
Germany had been expressly forbidden by the Treaty of Ver 
sailles to maintain any armed forces. Unfortunately this state of 
affairs was not appreciated in Britain either by Mr. Baldwin's 

1 Air Vice-Marshal H. H. Nawab Haji Sir Muhammed Hamiduila Khan 
(1894-1961) who succeeded his mother Begum Sultan Jehan on the latter s 
abdication in 1926, was the first male ruler of the state for more than eighty 
years, there having been a remarkable succession of female Nawabs pi 
Bhopal since 1844. The last one was known popularly as 'the Queen Victoria 
of India*. 



i6 

Conservative Government or by the general public. Almost 
alone among parliamentary back benchers, for he was in the 
political wilderness during these critical years, Winston Churchill 
harped unceasingly on what he knew to be going on in the new 
Reich of Adolf Hitler and his Nazi followers. As Churchill put 
it, c my mind was obsessed by the impression of the terrific 
Germany I had seen and felt in action during the years of 1914 
to 1918, suddenly again becoming possessed of all her martial 
power, while the Allies who had so narrowly survived gaped 
idle and bewildered. Therefore I continued by every means 
and on every occasion to use what influence I had with the 
House of Commons and also with individual Ministers to urge 
forward our military preparations and to procure Allies and 
associates for what would before long become again the Common 
Cause.' 1 

Not being in the Government, Churchill had no access to 
official information, so he decided to pursue various private 
lines of inquiry in order to obtain facts and figures in support 
of his arguments. Among them, indeed perhaps the most sig 
nificant, were those provided by Stephenson through access he 
managed surreptitiously to obtain to the balance sheets of the 
steel firms of the Ruhr. In April, 1936, Stephenson reported to 
Churchill that the expenditure by Germany upon purposes 
directly and indirectly concerned with military preparations, 
including the strategic roads, amounted to the equivalent of 
eight hundred millions sterling. 

The effect of this startling piece of information on Churchill 
was immediate and characteristic. He decided that the British 
public should know the facts. Accordingly he embodied 
Stephenson's figure of 800 millions in a parliamentary question 
to Mr. Neville Chamberlain, which he put to the then Chan 
cellor of the Exchequer and future Prime Minister on the floor 
of the House, having previously given him private notice of his 
intention. Chamberlain replied that the Government had no 
official figures, but from such information as they had he had no 
reason to think that Churchill's figure was 'necessarily excessive 5 
as applied to either 1935 or 1936, although, as Churchill him 
self would agree, the Minister added, 'there are elements of 
conjecture'. This answer, of course, clearly implied that the 

1 Winston Churchill. The Second World War. I, 176. 



17 

figure had been confirmed by the Government's own secret 
Intelligence service. 

For the next three years, that is until Churchill rejoined the 
Cabinet on the outbreak of the Second World War, Stephenson 
continued to feed him with detailed evidence of Hitler's 
rearmament expenditure. That', said Stephenson modestly, 
looking back afterwards, 'was my only training in espionage.' 



It was inevitable that sooner or later Stephenson should come 
into contact with the Government's secret intelligence organ 
ization. The introduction was provided by an influential back 
bench Conservative M.P., Ralph Glyn, later Lord Glyn, who 
had been Parliamentary Private Secretary to Ramsay Mac- 
Donald, when MacDonald was Prime Minister and later Lord 
President of the Council. Glyn was also a prominent figure in 
the City, where he was known to Stephenson as a director, 
among other companies, of the British Match Corporation, 
which obtained some of the raw material for its manufactures 
from Sweden, a country in which Stephenson's Pressed Steel 
was interested from the point of view of the mining of iron ore. 
Their common interest in Sweden's industrial potential led to 
meetings at which information was exchanged, information 
which from Stephenson's side covered the supply of Swedish 
iron ore to Hitler's armament factories. Glyn suggested that 
this information should be made available to the official Secret 
Intelligence Service (S.I.S.) and he arranged for Stephenson 
to meet a high-ranking member of that service. 

The existence of the Official Secrets Act in Britain has always 
acted as an effective bar to the publication of factual details 
of this legendary body. Authentic information on the subject 
used not to go beyond the announcement of the sums of money 
which Parliament dutifully voted every year for its upkeep 
without asking any questions as to the precise manner in which 
this money was expended. Writers who had personal experience 
of the service and felt impelled to write about it, such as Sir 
Compton Mackenzie in his amusing Water on the Brain and 
Mr. Somerset Maugham in his more serious Ashenden, were 
obliged to do so in ostensibly fictional form, a device also 



i8 

employed more recently by Graham Greene in Our Man^ in 
Havana and Ian Fleming in his enthralling James Bond stories. 
When Mackenzie unwisely presumed tb depart from this polite 
fiction and described some of the actual inner workings of the 
organization in his autobiographical Greek Memories, he was 
promptly prosecuted at the Old Bailey and severely punished, 
while the offending work was suppressed. One unfortunate 
result of the fictional approach was to invest the service with 
a wholly imaginary glamour in the public mind, which con 
ceived the average British secret agent as a rather Kiplingesque 
figure wearing a monocle and spats, pursued across Europe by 
a ravishingly attractive version of Mata Hari who habitually 
attempted to steal the plans of the fort from his champagne- 
drugged person after a passionate seduction scene in a sleeping 
car between Vienna and Bucharest* 

As Stephenson was to discover, the reality was far removed 
from the conventional picture, and the prosaic S.I.S. head 
quarters were very much like those of any other government 
department, such as the Board of Trade, except that their 
activities were largely screened from public view in spite of 
such an occasional slip-up as Compton Mackenzie's Greek 
Memories. For many years the chief of the service, always 
discreetly referred to by those in the know as C C', had been a 
retired admiral. Indeed he had been in command at the time 
of the real-life exploits of Mackenzie and Maugham during the 
First War. But there was soon to be a new C C 5 in the person 
of the admiral's principal assistant, a socially well-connected 
soldier (Life Guards, D.S.O. and M.C. in the First War), who 
had married twice into the peerage. It was to this distinguished 
officer that Ralph Glyn now introduced Stephenson. To dis 
close his identity would not in the ordinary course advance the 
purpose of this narrative. But as it was to be announced by the 
notorious William Joyce ('Lord Haw-Haw') in one of his early 
war-time broadcasts from Germany, not to mention various 
journalists after the war such as the American Joseph Alsop 
(in the New York Herald-Tribune) and the English Malcolm 
Muggeridge (in the Mew Statesman] , there seems to be no par 
ticular point in withholding it here. He was Colonel Stewart 
Menzies, later Major-General Sir Stewart Menzies, K.C.B. 5 
whose brief biography as contributed by himself to Who V Who 



indicated that lie was educated at Eton, that his regiment was 
the Life Guards and that his London clubs were White's and 
the St. James's. 

The successful Canadian business man got on well with 
this under-cover representative of English upper-class society, 
although he could not understand why his name should be 
pronounced 'Mlngiss' instead of as it was spelt phonetically. 
For his part Menzies was most grateful for the industrial and 
economic intelligence which Stephenson gladly undertook to 
provide free of charge, and Menzies immediately instructed 
one of the most experienced senior officers in his organization 
to act as liaison between them. Stephenson's reports were passed 
on to the Industrial Intelligence Centre (I.I.C.), which had 
been set up some years previously under Major (later Sir) 
Desmond Morton to study and report to the Committee of 
Imperial Defence on the state of industrial preparedness of 
foreign countries to make war. This able and far-seeing indi 
vidual, who was to act as Winston Churchill's Personal Assistant 
throughout the whole of the latter's war-time Premiership, was 
also concerned with the preparation of strategic plans for 
economic warfare for the Chiefs of Staff, and his small centre 
provided the nucleus of the Intelligence Department of the 
embryo Ministry of Economic Warfare. Morton was to become 
a close friend and ally of Stephenson's, and their collaboration 
was to prove invaluable in sustaining Stephenson when the 
time came in America. 

The adoption of the term ' economic warfare' in the pre-ig3g 
planning period introduced a much broader and more positive 
conception of the role of economics in a future war, a concep 
tion with which Stephenson, like Morton, was in complete 
agreement. Incidentally it was Morton and his I.I.C. that 
coined the term, and led the authorities to reject the older 
conception of 'blockade' as out of date in the 'total war* of the 
future for which they were planning. In this, said Morton, many 
civilian elements would have to be taken into account, not only 
in defensive but also in offensive operations, and the Ministry 
of Economic Warfare, when it officially came into existence, 
must be regarded as a fighting department on a level with the 
three service departments. As Morton used aptly to point out 
in the lectures he regularly gave at this period to the Imperial 



20 

Defence College and the Staff Colleges, there were four horse 
men of the Apocalypse and the one with the scales was neither 
the last nor the least of the four. Thus the new Ministry, Morton 
insisted, should concern itself not only with such overt activities 
as contraband control but also with a whole new offensive field 
of "special operations' in the shape of subversion and sabotage 
to be directed against both the enemy country and those neutral 
countries from which the enemy drew his supplies. 1 

The German output of high-grade steel for armament manu 
facture depended on the Bessemer process in which iron ore 
of high phosphorus content from the Gallivare mines in northern 
Sweden was used. Normally this was shipped in winter through 
Narvik on the west coast of Norway, and, in the spring and 
summer when they were free from ice, through Lulea and other 
Swedish ports on the Gulf of Bothnia. When Hitler launched 
his blitzkrieg against Poland at the beginning of September, 
1939, Germany had about nine months' supply of ore, sufficient 
only for the short war on which the Nazis were gambling. 
With the immediate entry of Britain and France into the con 
flict and the likelihood that it would be prolonged well into 
the following year, it became imperative for Germany that the 
Swedish supplies should continue and if possible be increased. 
Meanwhile Fritz Thyssen, the German industrialist, now a 
refugee in Switzerland, had let it become known in Allied 
circles that he had told Hitler and Goering that the war would 
be won by the side which secured control of the Swedish ores. 

Mr. Churchill, who had joined the Chamberlain Government 
and occupied his old office in the Admiralty, immediately 
applied his mind to this question. The new First Lord of the 
Admiralty was informed that ore carriers sailing from Narvik 
to German ports would hug the Norwegian coast as far as the 
Skagerrak, and he accordingly proposed that mines should be 
laid in Norwegian territorial waters as a means of forcing the 
vessels into the open sea. No action on these lines was taken at 
the time, largely through Foreign Office scruples on the subject 
of Norway's neutrality. As it happened, hardly any German 
or Swedish ships were trying to take ore south from Narvik at 
this time, principally it appears on account of the reluctance 
of their crews to sail. Stephenson now learned through his 

1 W, N. Medlicott. The Economic Blockade (1952), I, 16. 



21 

Swedish correspondents that the Germans were accumulating 
ore at the ice-free Baltic port of Oxelsund, about sixty miles 
south-west of Stockholm, against the freeze-up in the Gulf of 
Bothnia. This information he passed on to Churchill who told 
the Cabinet that in consequence the Germans would be able 
to bring good supplies down the Baltic via the Kiel Canal to 
the Ruhr during the winter months. 1 

At the same time Stephenson proposed that ore shipments 
from Oxelsund and the other ports on the west coast of Sweden 
which might be used after the break-up of the ice should be 
sabotaged, and he volunteered to carry out the operation him 
self with the aid of his Swedish friends. Churchill from the 
Admiralty welcomed the idea enthusiastically, while continuing 
to press for the mining of the Norwegian waters since the Narvik 
shipments had been resumed on a modest scale. On December 
J 6, 1939, he pointedly recommended in a memorandum which 
he placed before the Cabinet that the ore from Oxelsund c must 
be prevented from leaving by methods which will be neither 
diplomatic nor military'. 2 Morton at the new Ministry of 
Economic Warfare was equally enthusiastic, although his 
Ministry had not yet assumed political responsibility for Special 
operations'. 

At this period, subversion (S.O.i) and sabotage (S.O.2) were 
regarded as off-shoots of the *C' organization headed by Colonel 
Menzies and as such formed part of what was now officially 
referred to as M .1.6. In charge of the S.O. side was a sapper 
officer, Colonel Laurence Grand, known in the service as *D*, 
who had spent many years soldiering in India. As soon as 
Stephenson's project had been approved in principle, it was 
turned over to the T> 3 section for the details to be worked out 
and then carried into execution. For this purpose one of *D"s 
officers was specially attached to Stephenson as an assistant: 
his job was to collect supplies of high explosive in plastic form 
and convey them secretly to Sweden, where Stephenson would 
arrange for their distribution among his Mends. These pre 
parations were duly made, the explosives being Introduced in 
diplomatic bags carried by the officer in question who travelled 
on a diplomatic courier's passport. 

1 Churchill. I, 424. 

2 Churchill. I, 431. 



22 



At this time plastic explosives were quite a novelty; these 
were the first of their kind to be produced at Woolwich Arsenal 
and the first to leave England. The bags, which each contained 
thirty to forty pounds of raw material, with accompanying 
detonators, were stored in a cellar of the British Legation in 
Stockholm, immediately underneath the Minister's office. This 
arrangement was facilitated by the Military Attache, who was 
let into the secret and co-operated fully, although the Minister 
himself knew nothing about it. If he had had any inkling of what 
hewassitting on top of, the accustomed evenflowof hisdespatches 
to the Foreign Office might have been somewhat disturbed. 

More of the plastic was consigned to the studio of a Swedish 
friend of the Military Attache, an amateur sculptor, who 
pretended to use it for his modelling. This was quite feasible 
since plastic explosive is indistinguishable in appearance from 
plasticene used by sculptors: the difference can only be detected 
by their smell. 

For his part, the British Military Attache took a considerable 
risk of being compromised, since two service attaches in other 
missions the German Naval Attache and the Soviet Military 
Attache had recently been expelled from the country for be 
coming involved in activities which the Swedes considered had 
endangered their neutrality. Furthermore, another member of 
the Legation staff, who had been informed of what was afoot 
by his military colleague, became so worried that he had a 
complete nervous breakdown. He slept with a hatchet by his 
bed and the door barricaded, and, in the Military Attache's 
words, 'called us all at 2 a.m. to a "conference"!* He eventually 
had to be recalled to London. 'We got him off', the Military 
Attache wrote to Stephenson's assistant, c but he was as dotty 
as hell largely your doing, and mine.' 

The operation involved the two principal participants in 
considerable personal risk. There were plenty of German under 
cover agents in Sweden, and they were quite capable of kid 
napping or murdering the two British agents if they should 
discover what they were up to, since their purpose was to blow 
up the cranes and other mechanical equipment used for loading 
the iron ore aboard the German ships. But Stephenson seems 
to have been much less concerned with possible danger from 
the enemy than from his travelling companion who insisted at 



23 

all times on carrying a loaded revolver, even in bed. On one 
occasion he accidentally let it off in his hotel room in Stockholm, 
narrowly missing Stephenson's leg. 

In fact, the operation was frustrated not by the Germans but 
by the Swedes. News of the saboteurs' plans reached the ears 
of King Gustav, and it threw the aged monarch into a state 
bordering on panic. He immediately sent a frantic telegram to 
King George VI, appealing to him to call off the operation, 
which he assured his brother monarch would undoubtedly 
result in the Germans invading Sweden. King George lost no 
time in informing Lord Halifax, the Foreign Minister, and 
Stephenson and his assistant were consequently ordered to take 
no further action. 

The possibility that Sweden would be overrun by the Nazis 
had already been increased by the decision of the Allies at a 
meeting of the Supreme War Council in Paris on February 5, 
1940, to send reinforcements to the gallant Finns in theii 
struggle against the vastly superior forces of Soviet Russia. It 
was planned to despatch an expeditionary force to Narvik, 
which would have the effect of cutting off the iron ore as well 
as helping the Finns. But Germany made it clear that if Allied 
troops entered either Norway or Sweden, she would interfere, 
and so the project came to nothing, although Churchill was 
always in favour of taking the risk. 

At this stage Stephenson, who had not yet left Stockholm, 
was asked to continue his journey to Helsinki and there discuss 
with the relevant Finnish authorities possible alternative means 
of helping them, either by subversion or sabotage. Among 
those whom Stephenson saw was the aged Field-Marshal 
Mannerheim, who had saved his country in 1917 from the 
Soviets and was responsible for the Mannerheim Line of 
defences which the Soviet forces had now breached. The Field- 
Marshal told Stephenson that it was now too late to do any 
thing effective and that the only alternative to complete 
annihilation at Soviet hands was for Finland to sue for peace. 
She had already begun overtures to this end, and peace was in 
fact concluded on March 13, ig^o, Finland being obliged to 
cede to Russia a considerable slice of her territory. Stephenson 
returned to London greatly disheartened, as indeed Churchill 
also was, by these fruits of allied indecision. 



24 

At the end of March, after seven months' maddening delay, 
the Supreme War Council agreed to the mining of Norwegian 
waters and the Cabinet authorized Churchill to carry out this 
operation. But it came to late. Twenty-four hours later the 
Germans attacked Norway, with cold-blooded treachery, 
landing ammunition and other military supplies in apparently 
empty ore carriers running into Narvik. 

The Swedes had a good army and could eater Norway easily, 
and Churchill shared French desires that they could be brought 
into the war on the side of the Allies with general assurances 
that all help would be given to them and that British troops 
would be active in the Scandinavian Peninsula. *It would be 
disastrous', he told Chamberlain two days after the German 
landings in Norway, e if they remained neutral and bought 
Germany off with iron ore from Gallivare down the Gulf of 
Bothnia.' Hence, he added, 'our diplomacy should be active in 
Stockholm'. 1 

Stephenson would gladly have done anything he could with 
his Swedish friends to achieve this object. But it was not to be. 
Both Chamberlain and Halifax rejected Churchill's proposed 
method of approach to the Swedes. Once more a valuable 
opportunity was allowed to slip away, and Sweden remained 
neutral in the conflict, with the consequences that Churchill 
had predicted. 

Meanwhile Stephenson had returned to London and reported 
to Intelligence Headquarters. He was thanked for what he had 
done in Scandinavia and asked if he would undertake another 
secret mission, this time to the United States. He immediately 
agreed and went home to repack his bags. 

5 

Stephenson travelled to America ostensibly as a business man 
engaged in promoting the interests of his various companies. 
His secret instructions were explicit but limited in purpose to 
furthering Anglo-American co-operation in one specific field. 
He was required to establish relations on the highest possible 
level between the British S.I.S. organization and the U.S. 
Federal Bureau of Investigation. Such contacts between the 
1 Churchill. I, 481. 



25 

two services as existed before the war were largely of a routine 
character and confined to information about wanted criminals 
and suspicious applications for British visas, which might be 
referred by the Passport Control branch of the British Con 
sulate-General in New York to the local F.B.L office. But with 
the outbreak of the war even these contacts, owing to the fact 
of Britain's belligerency and America's neutrality, had neces 
sarily to be maintained on a tenuous and unofficial basis be 
tween the individual officers concerned. German intelligence 
and subversive activities in the United States at this time, 
which were directed against the allied war effort, did not 
threaten American internal security. But without the co-opera 
tion and good will of the F.B.L, the British intelligence and 
security services were powerless to take any effective counter- 
measures, nor could they really function at all. 

Stephenson was informally introduced to the head of the 
F.B.L by a mutual friend, Gene Tunney, the American world- 
champion boxer, as has already been noted. At this date 
John Edgar Hoover was forty-five years of age, a year older 
than Stephenson, and had been Director of the F.B.L since 
1924. An able lawyer and criminologist, Hoover had first been 
appointed Acting Director at a time when the Bureau was in 
low water through being involved in the political scandals 
of President Harding's Administration. He had proved an 
immediate success in spite of some ill-natured criticisms about 
his being too young for the job; his appointment had been 
speedily confirmed; and during the next fifteen years he had 
succeeded in building up the F.B.I, from a little known and 
poorly regarded federal agency into a renowned national 
institution, dedicated to the establishment of the conception 
that in America, at least, crime does not pay. Furthermore, he 
had been careful to keep free from party politics, serving the 
cause of law enforcement regardless of whether the occupant of 
the White House was a Republican or a Democrat, and his 
public relations were excellent. Hoover's 'G-men' (G for Govern 
ment) were famous from coast to coast in their relentless pursuit 
of gangsters and hoodlums, and the Bureau's ambitious Direc 
tor took good care to ensure that their exploits in the line of 
duty received the widest publicity. One F.B.L agent, fatally 
wounded in a gun battle with two bank robbers, was said to 



26 

have died with the heroic words on his lips, Tell Mr. Hoover 
I did my best 5 . 

Hoover listened with polite attention, as Stephenson explained 
the purpose of his visit. Then he spoke out frankly. He told his 
caller that, while he himself would welcome the idea of working 
with British Intelligence, he was under a strict injunction from 
the State Department to refrain from collaborating with the 
British in any way which might conceivably be interpreted as 
infringing or compromising United States neutrality in the 
European struggle, and he made it clear that he would not be 
prepared to contravene this policy without a direct order from 
the White House. Further, he stipulated that, even if President 
Roosevelt could be persuaded to agree to the principle of col 
laboration between the F.B.L and the British S.I.S., this 
collaboration should be effected initially by a personal liaison 
between Stephenson and himself, and that no other United 
States Government Department, including the Department of 
State, should be informed of it. 

Stephenson agreed to this condition indeed he had no 
alternative and undertook to get one of the President's con 
fidential advisers, with whom they were both acquainted, to 
put the matter before Mr. Roosevelt. The intermediary chosen 
for this purpose was Ernest Cuneo, a clever lawyer of Italian 
descent from New Jersey with a most engaging personality, 
then in his mid-thirties. Cuneo, who is now president of the 
North American Newspaper Alliance, had begun his career as 
legal assistant to New York's colourful Mayor Fiorello La 
Guardia, and then, like his first employer, became a successful 
international law practitioner, specializing in cases of Western 
European and Mediterranean interest, besides acting as stand 
ing counsel to the Democratic National Committee; this had 
brought him into touch with the White House. Stephenson 
accordingly lost no time in communicating with Cuneo, who 
promised to see the President as soon as possible. 

A day or two later Cuneo reported that President Roosevelt 
had welcomed the idea enthusiastically. There should be the 
closest possible marriage between the F.B.L and British Intel 
ligence 5 , the President had said. Later, by way of confirmation, 
Mr. Roosevelt repeated these words to the British Ambassador 
in Washington, then Lord Lothian, 



2 7 

That such an agreement was reached at all was a remarkable 
indication of the President's clarity of vision, while the fact that 
it had to be kept secret even from the State Department pro 
vided a striking illustration of the strength of American 
neutrality at this period. It was all the more courageous of 
Franklin Roosevelt to act as he did, since he was in the last year 
of his Presidential term and he had necessarily to behave with 
particular circumspection if he was to run again successfully 
for election. The isolationist atmosphere was strong throughout 
the country, the old anti-colonialist and anti-imperialist 
prejudices against the British died hard, and there were few 
Americans, in or out of Congress, who realized that the safety 
of their own country would be endangered by the collapse of 
Britain. Even pro-British sympathizers had become disheartened 
by the disastrous appeasement policy of the Chamberlain 
Government and the indecisions and blunders of what they 
called c the phoney war 5 . 

It was true that the Neutrality Act had been amended so as 
to remove the embargo on the sale of arms to the Allies, but 
these had to be paid for in cash and they could not be conveyed 
across the Atlantic in American ships. Hence the operation of 
supply was known as 'Cash and Carry'. The British Purchasing 
Commission, which had been established in New York to obtain 
these supplies, was under the charge of a hard-working and 
influential Scots-Canadian industrialist, Arthur Purvis, who 
like Stephenson enjoyed the confidence of the Americans to a 
remarkable degree and like him too drew no salary for his 
official labours. ('It always takes a Scotsman to pull England 
out of a hole', he used to say with a chuckle.) But Purvis and 
his assistants in the Cunard Building on Broadway were much 
too busy working out supply policy with Mr. Henry Morgen- 
thau and the United States Treasury to attend to the security 
of the shipments for which they were in theory also responsible. 1 
In any event, they had no means of instituting adequate safe 
guards at the various ports where the material was loaded on to 
British ships and where, in Stephenson's view, the risk of sabo 
tage was most serious. For this purpose it was comparatively 
easy for the Germans to recruit dock labourers and stevedores 
from the local German, Italian and Irish communities, who 

1 Duncan HalL North American Supply (1955), 72 et seq. 



28 

hated Britain, while the F.B.I, agents were unable to intervene 
so long as German subversive activities did not directly threaten 
American interests. 

Upon his return to London, Stephenson reported these 
findings to S.I.S. headquarters. In the discussions which 
followed, he urged that any secret British organization which 
might be formed in the United States to assist the war effort, 
though necessarily founded on the liaison with Hoover and the 
F.BJ. for which he had laid the foundations, should cover a 
considerably wider field than the collection of secret intelligence 
by the old and well-tried methods; in other words it should 
comprise everything that was not being done and could not be 
done by overt means to assure sufficient aid for Britain, to 
counter the enemy's subversive plans throughout the Western 
Hemisphere, and to promote sympathy for the British cause in 
the United States. This included counter-espionage, political 
warfare and 'special operations'. 

Colonel Menzies thereupon told Stephenson that, as far as 
the service for which he had responsibility was concerned, he 
would be grateful if Stephenson would accept the appointment 
of Passport Control Officer in New York, P.C.O. being then 
a convenient 'cover 3 for S.I.S. representatives abroad. 
Stephenson replied that he would like some time to think over 
this offer, as he had not envisaged an immediate return to the 
United States for what might well turn out to be a prolonged 
period. Anyhow he felt he had to consult others who might be 
interested in the conduct of secret activities. 

Meanwhile big political changes were afoot in England. 
These were foreshadowed by the growing public discontent 
with the Chamberlain Government's conduct of the war, 
discontent which came to a head in the bungling of the Nor 
wegian campaign. The latter has been well described by James 
Leasor in his book, War at the Top. 1 

The British landing in Norway to defend that country against 
the Nazis was an example of how not to carry out such an 
operation. Almost everything was left to chance. They could 
not land their out-of-date heavy guns and tanks because of 
German air superiority; the Norwegians were hampered by 

1 James Leasor. War at the Top (1959)5 at pp. 73-4. 



29 

equipment of even greater age and uselessness. Barely twelve 
thousand British troops were put ashore and these landed 
through their own skill, perseverance and determination, rather 
than through any feat of planning, to engage ten times as many 
Germans. Their commanders complained bitterly of the lack 
of accurate maps, or information about beaches and fjords. 
One transport sailed without either a barometer or chronometer 
and with the wrong charts. Several commanders were issued 
with plans based on woodcuts of Norwegian beauty spots dating 
back to 1860 which obviously bore no relation to the same 
places eighty years on. Some jetties had been described as 
possessing cranes and heavy tackle; other possible landing 
beaches were said to be suitable for small boats. In fact, the 
jetties had been abandoned half a century ago, and the beaches 
were strewn with great rocks, and were unapproachable by 
anything larger than a canoe. This lack of topographical intelligence 
played a heavy part in the defeat. As a result of this de'bdcle, the 
Germans gained Norway as a most valuable air and submarine base 
on the North Atlantic coast, and also won control of the iron ore, for 
a loss of only 1,300 men. Most important, they now knew that Allied 
talk of welcoming attack was bravado; they knew how weak we were, 
and so did the rest of the world. [My italics.] 

On May 10, 1940, Hitler followed up his success in Norway 
by launching a lightning attack without previous warning upon 
Belgium, Holland and Luxembourg. Later that same day 
Chamberlain resigned his office of Prime Minister, and the 
King sent for Winston Churchill, who immediately set about 
forming his famous National Coalition Government. In the 
consequent reshuffle of posts, the key Ministry of Economic 
Warfare went to one of the most energetic and self-confident 
of the Labour Party leaders. Dr. Hugh Dalton, who was also 
put in charge of all 'special operations', the old S.O.I and 
S.O.2 branches having been combined to form S.O.E. (Special 
Operations Executive), or, as the new Prime Minister jokingly 
called it, the Ministry of Ungentlemanly Warfare. Other 
appointments of particular interest to Stephenson were those 
of his old Canadian friend Lord Beaverbrook as Minister of 
Aircraft Production and his English friend and business 
associate Mr, Frederick Leathers, later Lord Leathers a as special 
adviser to the Ministry of Shipping. (Soon, under the stresses 
of the Battle of the Atlantic, the Prime Minister was to unite 
the Ministries of Shipping and Transport under the experienced 



30 

direction of Leathers, who thus became the first Minister of 
War Transport.) 

Stephenson talked to these people and to various others 
associated in one way or another with the new and dynamic 
direction of affairs. But he still could not make up his mind 
whether to go back to America. Finally he sought an interview 
with Mr. Churchill, and this decided him. The Prime Minister 
received him in his old room at the Admiralty since he had 
not yet had time to move into Downing Street. He spoke 
briefly of the United States and of their vital importance to 
the allied war effort, of the need of forty or fifty of their older 
destroyers on which he had already cabled President Roosevelt, 
and of the effective role of co-ordinated secret intelligence and 
special operations in the American theatre. Suddenly the Prime 
Minister looked Stephenson straight in the face. 'Your duty 
lies there,' he said. You must go.' 



CHAPTER II 



THE BIRTH OF B.S.C. 



STEPHENSON'S return to New York,, this time with his wife, 
coincided with the evacuation of the remaining British forces 
from Dunkirk and the drawn-out agony of the French military 
and political collapse. The new British Passport Control Officer 
found the atmosphere bleakly defeatist so far as Britain's 
chances of survival went. This was the view of many of the 
President's influential advisers, encouraged by the two principal 
American Ambassadors abroad,, William BulHtt in Paris and 
Joseph Kennedy in London, the latter constantly and vehe 
mently counselling the President against 'holding the bag in 
a war in which the Allies expect to be beaten'. 1 But it was not 
Stephenson's view. 'The arsenals of Britain are empty', he told 
Roosevelt when they met at this time, 'but she will win out. 
The British do not kneel easily. 5 Meanwhile Roosevelt, though 
continuing his intimate correspondence with Churchill, had 
been obliged to refuse the Prime Minister's repeated requests 
for American destroyers on the ground that this would require 
the assent of Congress and that the time was not opportune. 

For some years the Passport Control Officer had been accom 
modated in a small room in the British Consulate-General in 
down-town Manhattan with a staff consisting of one assistant 
and a woman clerk and secretary. Stephenson took one look 
at this accommodation and saw that it was totally unsuitable 
for his own base headquarters and the kind of intelligence 
organization which he contemplated. It was his first and 
only visit to the cramped and depressing offices in Exchange 
Place. Until he could lease suitable office space in a more 
convenient part of the city, he decided to work from the 

1 Robert Sherwood. The White House Papers of Harry L. Hopkins (i94 8 )- 
I, 151-2. 

3 1 



32 

apartment he had taken in Hampshire House overlooking 
Central Park. 

Next he flew down to Washington and reported his arrival 
to Lord Lothian at the British Embassy. He found the Ambassa 
dor sympathetic and helpful and thoroughly familiar with the 
local political scene, but also frankly worried. Lothian had just 
received a cable from Churchill urging him to see the President 
and impress upon him what would happen if Britain broke 
under a German invasion and a pro-German Quisling type of 
Government in Whitehall were induced by the prospect of 
easier peace terms to surrender the British Fleet. 'You should 
talk to him in this sense', Churchill had said, e and thus dis 
courage any complacent assumption on the United States' part 
that they will pick up the debris of the British Empire by their 
present policy. On the contrary, they run the terrible risk that 
their sea-power will be completely over-matched. Moreover, 
islands and naval bases to hold the United States in awe would 
certainly be claimed by the Nazis. If we go down Hitler has 
a very good chance of conquering the world.' x 

On the night of June 16, 1940, Lothian was summoned to 
the White House where he saw the President with Sumner 
Welles, the Under-Secretory of State. The news had just come 
in that the French Premier Paul Reynaud had resigned and 
had been succeeded by the Petain-Weygand Government which 
had begun negotiations with the Germans for an armistice. 
After saying he thought Churchill's telegrams to Reynaud, 
urging that the French Fleet sail forthwith to British harbours 
pending negotiations, were 'perfectly grand', the President went 
on to express the hope that as many French airmen and others 
would assist in carrying on the war in Algiers or with the 
British, as also that, if ever a similar crisis arose in Great Britain, 
the war would be carried on overseas and that the British Fleet would 
not be surrendered. To this Lothian replied that Great Britain 
could not be expected to transfer her Fleet across the seas and 
associate it with any country that was not going to use it and 
its own resources to the limit to rescue Great Britain herself 
from conquest. 

President Roosevelt then told the Ambassador that, so far as 
he had thought out the position, he considered that, in the event 

1 Churchill. II, 355. 



33 

of Britain becoming useless as a naval base, the Fleet ought to be 
withdrawn to Capetown, Singapore, Aden and Sydney, while 
the main American navy reinforced the Atlantic and undertook 
the defence of Canada and other British possessions. He added 
that, if the crisis reached this point, the United States would 
certainly allow British ships to use American facilities for re 
forming and supply, and that, while they might not have for 
mally declared war on Germany because of constitutional 
difficulties, they would in effect be a belligerent 'assisting the 
Empire in every way and enforcing the blockade on Germany'. 
This tremendous decision to back the seemingly hopeless 
cause of Britain with all the material and moral encouragement 
he could supply was entirely Roosevelt's own; it was taken 
against the advice of the majority of the White House official 
circle, and at a time when his position in the country in an 
election year was far from secure. He immediately followed it 
up by giving his Cabinet a new bi-partisan look, having antici 
pated over the past six months that the development of e a real 
crisis' in the shape of a German victory in Europe would justify 
him in largely dispensing with what he called c strictly old- 
fashioned party government'. He accordingly dismissed the 
isolationist Secretary of the Navy and his colleague in the War 
Department, replacing them with leading Republicans who 
were powerful advocates of American intervention in the 
European struggle and strongly pro-British. Frank Knox, 
Boston-born proprietor of the Chicago Daily News, whom Roose 
velt considered of all the Republican leaders to 'have shown 
a truer understanding of the effect which the International 
situation will of necessity exert on our domestic future* he 
had been the Republican nominee for Vice-President in the 
1936 election became Secretary of the Navy, while the veteran 
New York lawyer, Henry L. Stimson, who had been Secretary 
of War under President Taft nearly thirty years before, returned 
to that office at the urgent invitation of Roosevelt, because in 
Stimson's words 'everybody was running around at loose ends 
in Washington and he (Roosevelt) thought I would be a 
stabilizing factor in whom both the Army and the public 
would have confidence'. 1 At first the President seriously 

1 Henry L. Stimson and McGeorge Bundy. On Active Service in Peace and 
War (1952), 144. 



34 

considered appointing another Republican, the fifty-seven-year- 
okTWild BilF Donovan, to this important post, but after reflec 
tion decided to keep him for other duties. This was to prove a 
most fortunate decision for Anglo-American co-operation in the 
joint prosecution of the war. 

William Joseph Donovan 3 whom Stephenson had first met 
during a visit to England and with whom he now lost no time 
in renewing acquaintance, was an Irish-American of truly 
dynamic character. He could be fairly described as a big man 
in every way, with great generosity of spirit, many enthusiasms 
and considerable breadth of interests. The son of a poor family 
of Irish immigrants in Buffalo and a Roman Catholic who 
neither smoked nor drank alcohol, Bill Donovan was entirely 
self-made, having risen by what is known in America as 'the 
hard way' to become a most successful New York City lawyer 
with offices in Wall Street, and Acting Attorney-General under 
President Coolidge. It was his service with the famous 'Fighting 
6gth' in the First World War which had earlier earned him 
the Congressional Medal of Honour and also the title of 'Wild 
Bill*. (This was to some extent a misnomer since he was by 
nature an extremely modest person.) It had been generally 
thought that Herbert Hoover, for whom he had campaigned 
actively in the 1928 Presidential Election, would make Donovan 
Attorney-General on reaching the White House, but the 
appointment was blocked by e dry 5 elements in the Republican 
Party, to whom the idea of a member of a community with 
such 'wet' interests as the Catholic Irish-American was ob 
noxious, although Donovan himself was a teetotaller. After 
being defeated in the election for the Governorship of New 
York on the Republican ticket in 1932 he was successful in 
everything except politics Donovan had returned to his law 
practice, which he would periodically leave in the hands of 
his partners to visit Europe, touring the battle fronts in the 
Italo-Abyssinian campaign and the Spanish Civil War where 
he viewed with alarm the rise of Fascist power. Although be 
longing to opposing political parties Donovan and Roosevelt 
were old friends from Columbia Law School, where they had 
been classmates together. 'Frankly I should like to have him 
in the Cabinet', the President had told Frank Knox at the 
end of 1939, 'not only for his own ability, but also to repair 



35 

in a sense the very great injustice done him by President 
Hoover. . . .' x In fact, Donovan was now to become President 
Roosevelt's roving ambassador in Europe and later chief of 
all United States secret intelligence and 'special operations* 
overseas. 

Speaking many years later, in the privacy of his New York 
apartment, Stephenson was to recall the vital significance of 
initial contact with Donovan at this period. 'The procurement 
of certain supplies for Britain was high on the list 3 , he said, 
'and it was the burning urgency of the attempt to fulfil this 
requirement that made me instinctively I don't think it can 
be rated much higher than that concentrate on a single 
individual who, despite all my contacts in high places, might 
achieve more than any widespread effort on the official or 
sub-official levels which had so far been unproductive. My 
assessment was proved correct in the event. Donovan, by 
virtue of his very independence of thought and action, 
inevitably had his critics, but there were few among them 
who would deny the credit due to him for having reached 
a correct appraisal of the international situation in the 
summer of 1940. 

'At that time the United States Government was debating 
two alternative courses of action', Stephenson continued; 'one 
was to endeavour to keep Britain in the war by supplying her 
with material assistance of which she was desperately in need; 
the other was to give Britain up for lost and to concentrate 
exclusively on American rearmament to offset the German 
threat. That the former course was eventually pursued was due 
in large measure to Donovan's tireless advocacy of it. Im 
mediately after the fall of France not even the President himself 
could feel assured that aid to Britain was not to be wasted in 
the circumstances. I need not remind you of the despatches 
from the Ambassadors in London and Paris stressing that 
Britain's cause was hopeless, and the majority of the Cabinet 
here was inclined to the same conclusion, all of which found 
vigorous expression in organized isolationism with men like 
Colonel Lindbergh and Senator Wheeler. Donovan, on the 
other hand, was convinced that granted sufficient aid from the 
United States, Britain could and would survive. It was my task 

1 The Roosevelt Letters. Ed. Elliott Roosevelt (1952). Ill, 297. 



36 

first to inform him of Britain's foremost requirements so that 
he could make them known in the appropriate quarters, and 
secondly, to furnish him with concrete evidence in support of 
his contention that American material assistance would not be 
improvident charity but a sound investment/ 

Donovan's immediate reaction on hearing from Stephenson 
was to arrange a meeting with Knox and Stimson, at which 
both he and Stephenson were present. At this meeting the main 
subject of discussion was Britain's urgent need of destroyers, 
and various ways and means were explored for a formula to 
cover the transfer of forty or fifty of the old Tour-stackers', then 
in cold storage, to Britain, without infringing the American 
neutrality law and without affronting American public opinion 
in which ships of the navy have a special sentimental value. 
Knox pointed out that under the present law such a transfer 
could only be made against a quid pro quo which represented 
such an obvious increase in American security that the 
Administration could safely transfer to a foreign power part of 
its naval forces. Even so, the transaction on a narrow inter 
pretation of international law might be held to be a breach of 
neutrality. The only hope seemed to lie in being able to 
convince the President that he could sanction such an arrange 
ment by executive decree, for in its present mood Congress if 
consulted would certainly reject it. 

Besides the destroyers, Churchill had asked urgently for light 
naval craft, first line aircraft, including flying boats, and mili 
tary equipment and supplies. Stephenson thereupon suggested 
that Donovan should pay a visit to Britain so that he would be 
in a position to give the President a first-hand report, having 
seen for himself what conditions were like and what were the 
country's chances of success against Hitler. 

Donovan welcomed the idea, and with strong support from 
Knox it was referred to the President who immediately agreed 
that Donovan should make the trip and that he should travel 
as his unofficial personal representative. 



Encouraged as it was by Stephenson, Donovan's visit to 
England, which took place between mid-July and early August, 



37 

1 940, proved most fruitful. C I arranged that he should be afforded 
every opportunity to conduct his inquiries', Stephenson recalled 
afterwards. *I endeavoured to marshal my friends in high places 
to bare their breasts. He was received in audience by the 
King, he had ample time with Churchill and members of the 
Cabinet concerned. He visited war factories and military train 
ing centres. He spoke with industrial leaders, and with repre 
sentatives of all classes of the community. He learned what was 
true that Churchill, defying the Nazis, was no mere bold 
facade but the very heart of Britain which was still beating 
strongly.' 

One person Donovan did not see in London was the defeatist 
Ambassador Joseph Kennedy who by a calculated snub was 
not advised by the White House of Donovan's tour. However, 
he did see a number of American naval, military and army air 
force observers, who were attached to the Embassy. The latter 
included Lt.-Colonel (later General) Carl Spaatz. 'The story 
goes that the naval and army observers, when asked what they 
thought of the British chance of survival, replied they had not 
got a hope. Lt.-Colonel Spaatz, on the other hand, said that he 
and the army air force observers were convinced that the 
British would pull through because the Germans could not 
beat the R.A.F. and they would not invade until they had. 
Colonel Donovan went back to the United States and reported 
these observations, recommending the transfer of the destroyers 
to Great Britain.' 1 

At the end of July, on the eve of Donovan's departure from 
London, Churchill made a final appeal to Roosevelt for the 
destroyers: 'Mr. President, with great respect I must tell you 
that in the long history of the world this is a thing to do now. . . . 
If the destroyers were given, the motor-boats and flying-boats, 
which would be invaluable, could surely come in behind them. 
I am beginning to feel very hopeful about this war if we can 
get round the next three or four months. The air is holding well. 
We are hitting that man hard, both in repelling attacks and in 
bombing Germany. But the loss of destroyers by air attack may 
well be so serious as to break down our defence of the food and 
trade routes across the Atlantic.' 2 

1 John G. Winant. A Letter from Grosvenor Square (1947), at p. 35. 

2 Churchill. II, 356-7. 



38 

This brought matters to a head in Washington, where at a 
Cabinet meeting held in the White House on August 2, to quote 
the President's own words, It was the general opinion, without 
any dissenting voice, that the survival of the British Isles under 
German attack might very possibly depend upon their getting 
these destroyers'. Ways and means were discussed of conveying 
the destroyers to Britain by some form of direct or indirect sale. 
Roosevelt, who still felt that legislation was necessary for any 
such plan, thought that a British pledge that the Royal Navy 
would not fall into German hands, in the event of German 
success, but would sail for North American or Empire ports 
'where they would remain afloat and be available', would 
greatly lessen opposition in Congress, and he proposed to sound 
out Mr, Wendell Wilikie, who had just received the Republican 
Party nomination for President. 1 In fact, Willkie did give 
assurances that he would not make a campaign issue of 
the proposed transfer. Churchill, on the other hand, was 
reluctant to give any public pledge which, contemplating as 
it did the fall of Britain, would be most damaging to the 
morale of his people. Fortunately, with the return of Donovan 
and his reports to the President and Knox, the emphasis on 
the consideration for the transfer shifted to naval and air 
bases. 

'Donovan greatly impressed by visit', Stephenson cabled 
London on August 8. 'Hai strongly urged our case re destroyers 
and is doing much to combat defeatist attitude in Washington 
by stating positively and convincingly that we shall win.' As a 
lawyer Donovan argued that there was no need for the President 
to submit the plan to Congress, on the ground that it was, 
broadly speaking, an exercise of the traditional power of the 
Executive in foreign affairs, and in this he was vigorously 
supported in the Cabinet by Stimson and Robert Jackson, the 
Attorney-General, and outside by Dean Acheson, the future 
Secretary of State, and a group of influential New York lawyers. 
The President was soon converted to this view, and on August 
13, at a meeting with Knox, Stimson, Welles and Morgenthau, 
he drafted the essential principles of the so-called destroyers for 
bases deal, which now belongs to history. C I think the trick has 
been done', noted Lothian on August 16. 'At least the President 

1 Roosevelt III, 326. 



39 

told me on the telephone this morning that he thought it was. 
Donovan helped a lot, and Knox.' 1 

Owing to what Stephenson described at the time as 'strong 
opposition from telow and procrastination from above' 5 three 
weeks were to elapse before the agreement was formally con 
cluded. During this period the stage was principally occupied 
by discussions between Lothian, Welles and Knox, with 
Stephenson and Donovan playing strong supporting roles in the 
wings. On August 21, Stephenson informed London by cable: 
'Donovan has urged upon President to see promised matters 
through himself with definite results. Donovan believes you 
will have within a few days very favourable news, and thinks 
he has restored confidence as to Britain's determination and 
ability to resist. 5 In fact it was at midnight on the following day 
that Stephenson was able to report that the figure of fifty 
destroyers had been agreed by the President and that forty- 
four were in commission for delivery. On September 3, legal 
effect was given to the deal by an exchange of notes between 
Lothian and Cordell Hull, the Secretary of State. The ex 
change is a big thing', said Lothian at the time. It really links 
U.S.A. and the British Empire together for defence.' 2 It pro 
vided for a ninety-nine-year lease of British bases in the Carib 
bean in exchange for the fifty destroyers, a similar lease of 
bases in Bermuda and Newfoundland freely granted, and a 
personal reaffirmation to the President of the statement which 
the British Prime Minister had already made to Parliament 
that the Royal Navy would not in any circumstances be sur 
rendered to the Germans or sunk. 'Thus we obtained the fifty 
American destroyers . . . and both countries were satisfied/ 
wrote Churchill afterwards. The effects in Europe were 
profound.' 3 

In Stephenson's view, which he communicated to head 
quarters in London, this historic agreement could certainly ^not 
have eventuated when it did without Donovan's intercession, 
and in recognition of this fact Stephenson was instructed to 

1 Roosevelt. Ill, 32?- J- R- M. Butler, Lord I^thian (1960), 297- For 
detailed accounts of the transaction, see Churchill, 11, 353~o and Mail, 
1 39-45 9 n the British side, and Cordell Hull, I, 831-43, and Stunson and 
Bundy, 169-71, on the American side. 

2 Butler. 298. 

3 Churchill II, 368. 



4 

thank him on behalf of His Majesty's Government. During the 
same period and by the same means, there were other essential 
supplies which Donovan was largely instrumental in obtaining 
for Britain at this time, among them a hundred Flying Fortresses 
and a million rifles for use by the Home Guard in the event of 
a German invasion. Moreover, when Donovan was in London, 
Lord Beaverbrook, the Minister of Aircraft Production, had 
asked for particulars of the secret American Sperry bomb-sight, 
which he wished installed on British bombers operating over 
Europe. On his return to Washington, Donovan had urged on 
the President and Knox that the bomb-sight should be made 
available. At first they objected, pointing out with good 
reason that if employed in the manner contemplated the 
bomb-sight would sooner or later be bound to fall into enemy 
hands. Fortunately Stephenson was able to overcome this 
objection by advising Donovan, on the basis of recent British 
secret intelligence, that the Germans already possessed details 
of the invention. (Drawings of the bomb-sight, or one similar to 
it, had been sold to German agents in 1938.) On September 24, 
1940, Stephenson cabled London: "President has sanctioned 
release to us of bomb-sight, to be fitted henceforth to bombers 
supplied to us/ In fact, the Sperry bomb-sight was released a 
few days later, and forty sights were immediately provided 
from stock. 1 

Stephenson has described his work with Donovan at this 
period as 'covert diplomacy inasmuch as it was preparatory and 
supplementary to negotiations conducted directly by H.M. 
Ambassador'. At first consideration it may seem that this work 
was far removed from the secret intelligence and special 
operations with which he had been primarily charged, and 
indeed that it necessitated, since it was strictly a personal 
undertaking, no organizational machinery of any kind. But 
the truth is that whatever he was able to accomplish in the 
way of obtaining certain essential supplies during the fateful 
summer of 1940 was largely assisted by his connection with 
both secret intelligence and political warfare activities. 

For example, it would in all probability have been im 
possible for Stephenson to overcome the objections raised to 
releasing the Sperry bomb-sight to Britain, had he not had 

* Hall. 191. 



ready access to secret sources of information. Again, Donovan 
would certainly have found it considerably more difficult to 
achieve success in his negotiations if Stephenson had not had 
means at his disposal for influencing American public opinion. 
In fact, covert propaganda, one of the most powerful weapons 
which Stephenson and the organization which he was slowly 
building up employed against the enemy, was directly harnessed 
to this task. Thus, General Pershing had been persuaded 
through the good offices of an intermediary, a wealthy American 
business man named Albert Younglove Gowen, who was a 
friend of both Stephenson and the General, to come out with 
a strong speech early in August supporting the destroyers deal. 
Since Pershing was a national hero and was known to have no 
political ambitions or party affiliations, his voice carried great 
weight in the country. 1 Then, Donovan himself on his return 
from London wrote a series of articles in collaboration with a 
newspaperman, Edgar Ansel Mowrer, on 'German Fifth 
Column Tactics', based on material supplied by Stephenson 
from British secret intelligence sources. The articles, which 
created a great stir, were originally published in the influential 
Chicago Daily News owned by Frank Knox, the Secretary of the 
Navy, and reproduced in many other newspapers throughout 
the country, including the New Tork Herald-Tribune. They 
were also the occasion for a broadcast talk by Donovan over a 
nation-wide 'hook-up', the first ever afforded to a speaker 
other than the President. Finally Knox himself wrote an article 
summing up the series. 2 

3 

The United States Government's conviction of the wisdom in 
principle of providing Britain with material aid was reflected 
in a telegram which Stephenson sent to Intelligence Head 
quarters in London on September 14, 1940: *Our American 
friends desire guidance as to what requirements in addition to 
Flying Fortresses they may assist to fulfil.' For the next few 
weeks President Roosevelt could give the subject little personal 
attention as he was engaged in the election campaign, which 



1 New Tork Herald-Tribune, August 5, 1940. 

2 New Tork Herald-Tribune, August 20-24, 1940. 



42 

resulted in his triumphant return to the White House for a 
third term at the beginning of November. However, once the 
election was out of the way, and he had taken a short holiday 
cruise, the President bent all his energies to the task of helping 
his British friends. Churchill had told him that Britain was 
coming to the end of her dollar resources with which to purchase 
supplies in America, and this prompted the President, at his 
first press conference on returning from his cruise, to put 
forward the conception of lend-lease, using the simple and 
homely analogy of lending a neighbour a length of hose with 
which to fight a fire. He followed this up with his famous 
'fireside chat' on the radio, in which he told the American 
people that 'we must produce arms and ships with every 
energy and resource we can command' and that c we must be 
the great arsenal of Democracy'. After a two-month struggle in 
Congress, the Lend-Lease Bill which empowered the President 
to 'sell, transfer, exchange, lend, lease or otherwise dispose of 
defence materials for the Government of any country whose 
defence the President deems vital to the defence of the United 
States', eventually became law, in spite of violent opposition 
led by Senator Burton K. Wheeler and other members of the 
'American First' organization who claimed that its enactment 
would mean 'ploughing under every fourth American boy on 
foreign battlefields for the benefit of a decayed British Empire'. 1 

Stephenson's immediate task of helping with essential supplies 
was now accomplished, or rather it became inextricably a part 
of the broader purpose of promoting American sympathy, to 
which in turn his intelligence and propaganda activities were 
initially directed. In pursuing that purpose Donovan's co 
operation continued to be of inestimable value. Although some 
of the more important services which Donovan rendered 
Britain at this time were outside Stephenson's sphere of 
operations, nevertheless they deserve some mention here as one 
of the results of his liaison with Stephenson and also because 
they have not hitherto been described. 

During the autumn and early winter of 1940, Mr, Churchill 
was especially concerned to secure the assistance of the United 
States Navy in convoying British merchant ships across the 
Atlantic. At this time there were two German armed raiders 

1 Churchill. II, 495. 



43 

and the pocket battleship Scheer roaming the seas and the 
resultant losses to British shipping were constantly mounting. 
In the five weeks ending November 3, 1940, as the Prime 
Minister told the President in a letter seeking this protection, 
the losses reached a total of 4205300 tons. 1 However, this was a 
measure of assistance which the Americans were at first 
reluctant to extend for fear that the Germans would regard it 
as an excuse for declaring war on the United States. 

Stephenson discussed the problem at length with Donovan, 
whom he had little difficulty in persuading, first that it seemed 
unlikely on the basis of the evidence available that Germany 
would be provoked into a war with the United States by any 
thing short of direct aggression, at least until she had defeated 
Britain, and secondly, that for the American Navy to participate 
in convoy duty should be regarded as an essential step in the 
United States policy of playing for time, that is to say, in the 
policy of enabling Britain to keep the enemy at bay until 
American preparedness was sufficiently advanced to meet the 
German challenge. 

Donovan himself advanced these arguments at a conference 
with Knox, Stimson and Hull, who were impressed by them 
but felt they needed more concrete evidence before they could 
take action, particularly evidence supporting the contention 
that the necessity of agreeing to the British proposal outweighed 
the inherent risk in so doing. To obtain such evidence, Donovan 
proposed that he should pay another visit to London and go 
on to the Mediterranean, where the danger to British shipping 
and communications had recently been increased by the Italian 
invasion of Greece. This time it was agreed that Donovan 
should travel officially as representing the Navy Department. 
Before leaving, Stephenson, who flew as far as London with 
him, cabled Intelligence Headquarters that it was impossible 
to over-emphasize the importance of Donovan's visit. *He can 
play a great role, perhaps a vital one, but it may not be con 
sistent with orthodox diplomacy nor confined to its channels', 
Stephenson pleaded. 'You should personally convey to the 
Prime Minister that Donovan is presently the strongest friend 
we have/ 

After being delayed by bad weather for nearly a fortnight 
1 Churchill. II, 495. 



44 

in Bermuda, they reached London about the middle of Decem 
ber. Here they had talks with Churchill and others who, in 
Stephenson's words, 'appreciated the significance and potential 
ities of this second visit of one who had justified my "build up 55 
for him prior to his first visit'. The Prime Minister arranged 
for Brigadier Vivian Dykes, one of the Assistant Secretaries to 
the Cabinet and a brilliant military plamier, to accompany 
Donovan to the Middle East. 1 

Then Stephenson got the Director of Naval Intelligence at 
the Admiralty to send a signal to Admiral Cunningham, the 
Commander-in-Chief, Mediterranean Fleet, on the subject of 
Donovan's tour, 'which made it abundantly clear to the 
Admiral and his staff that Donovan was the most important 
emissary that they were ever likely to meet in this world or the 
next 3 , as Stephenson put it afterwards. 'I know', he added, 
'because I dictated every word of it myself in the presence of 
the D.N.I. in his office.' 

The following is an extract from this signal: 

Donovan exercises controlling influence over Knox, strong 
influence over Stimson, friendly advisory influence over Presi 
dent and Hull. . . . Being a Republican, a Catholic and of Irish 
descent, he has following of the strongest opposition to the 
Administration. ... It was Donovan who was responsible for 
getting us the destroyers, the bomb-sight and other urgent re 
quirements. . . . There is no doubt that we can achieve infinitely 
more through Donovan than through any other individual. . . . 
He is very receptive and should be made fully aware of our 
requirements and deficiencies and can be trusted to represent 
our needs in the right quarters and in the right way in the 
U.S.A 

Donovan was greatly impressed by the reception which 
Stephenson had arranged for him, saying afterwards that 'he 
had never been treated in such royal and exalted fashion and 
that the red carpet had been thicker and wider than he thought 
it was possible to lay'. Among others he had talks with Admiral 
Cunningham and General Wavell, who commanded the British 
naval and land forces respectively in the area, and as a result 
he was convinced that American supplies must be made 
abundantly available if Britain's important strategic position 

1 Dykes was killed in an air accident in 1943. 



45 

was to be held. On January 28, 1941, Churchill sent a message 
to Roosevelt thanking him for the 'fine work 3 which Donovan 
had done in the Middle East. 1 

At Churchill's suggestion, Donovan with the President's 
approval agreed to extend his tour to Bulgaria and Yugoslavia. 
The Prime Minister was anxious to find some means of up 
setting Hitler's timetable for the subjugation of the Balkan 
countries, which would have the effect of postponing even by 
a few weeks his contemplated attack upon Russia. This attack, 
which Churchill had learned of from intelligence sources, had 
been planned for May 15. As a result very largely of Donovan's 
actions it did not take place until June 22. 

Donovan went first to Sofia. He could not dissuade King 
Boris and the Bulgarian leaders from their pro-German policy, 
but he did succeed in implanting in their minds a measure of 
doubt as to the wisdom of that policy. Consequently they 
hesitated before allowing German troops unrestricted passage 
through their country so as to prevent the British forces from 
obtaining a foothold in Greece. The British Prime Minister 
had intimated that he would be content with a delay of twenty- 
four hours. Donovan secured a delay of eight days. 2 During 
this visit Donovan was shadowed by German agents, who even 
followed him into the Royal Palace, where they relieved him 
of his passport and other papers, although they found nothing 
compromising. 

When he reached Yugoslavia, Donovan found the pro- 
German Regent Prince Paul and his craven Government on 
the point of adhering to the Axis Powers. C I think we should 
find some means of getting across to the Prince Regent and 
others that the United States is looking not merely to the present 
but to the future', Roosevelt had written to Belgrade, 'and that 
any nation which tamely submits on the grounds of being 
quickly overrun would receive less sympathy from the world 
than a nation which resists, even if this resistance can be con 
tinued for only a few weeks. . . . Our type of civilizatioii and 
the war in whose outcome we are definitely interested, will be 

1 Churchill. Ill, 24. 

2 Bulgaria adhered to the Axis Tripartite Pact (Germany, Italy, Japan) 
on March I, 1940, and German troops immediately began to occupy the 
country and to move towards the Greek border. 



4 6 

definitely helped by resistance on the part of Yugoslavia and 
almost automatically resistance on the part of Turkey even 
though temporarily Yugoslavia and Turkey are not successful 
in the military sense.' 1 

Donovan did his best to get these views accepted, but he 
found that the Prime Minister, Dr. Cvetovic, and the Foreign 
Minister, Mr. Markovic, had already been summoned by Hitler 
to Berchtesgaden and committed their country to the Axis side. 
Only the Air Force General Simovic and a group of Serbian 
nationalist officers formed a clandestine opposition to German 
infiltration of Yugoslavia. Donovan accordingly visited Simovic 
at the Air Force Headquarters across the river from Belgrade 
at Zemun, The General asked him whether Britain could hold 
out against the Nazis and whether the United States would 
enter the war. After warning Simovic that he was merely 
expressing his personal views, Donovan answered both questions 
in the affirmative. As a result of this meeting Simovic was 
persuaded to organize the revolution which shortly afterwards 
led to the overthrow of Prince Paul and his treacherous 
Ministers and their replacement by a patriot Government led 
by Simovic. 2 Immediately Hitler heard this news, he counter 
manded an order moving three Panzer divisions from Roumania 
to southern Poland, and postponed the German invasion of 
Russia for five weeks, while he turned his immediate attention 
to Yugoslavia and Greece. 3 

Donovan returned to Washington on March 18, 1941. Next 
morning he had breakfast with the President, to whom he 
reported his findings. Roosevelt was delighted to see him, as he 
had just received another message from Churchill thanking 
him for the 'magnificent work done by Donovan in his pro 
longed tour of the Balkans and the Middle East*. ('He has 
carried with him throughout an animating, heart-warming 
flame.') 4 At his breakfast-time meeting Donovan particularly 
urged the importance of sending war materials direct to the 
Middle East if the British forces were to hold Egypt. The 

1 Roosevelt. Ill, 356 (memorandum dated February 20, 1941). 

2 The Yugoslav Ministers signed the Axis pact in Vienna on March 25. 
The revolution in Belgrade took over two days later, and on April 6 the 
German armies invaded both Yugoslavia and Greece. 

8 Churchill. Ill, 320, 323. 
* Churchill. Ill, 97. 



47 

President instructed him to consult with the Government 
departments concerned c to see what could be worked out 3 . He 
then promptly issued a proclamation to the effect that the 
Red Sea and the Persian Gulf were no longer combat zones 
from which American vessels were excluded by the Neutrality 
Act. Inside a week or two the ships were loading for Suez. 1 
Convoy protection for British vessels in their hazardous 
Atlantic voyages followed soon afterwards. 

At the President's request, Donovan again broadcast to the 
American people. His speech, which was widely publicized, 
was designed to create a favourable public atmosphere for the 
announcement of further measures of American intervention 
on the side of Britain. In essence it was a plea for the United 
States Government's policy of Enlightened self-interest*, 
delivered by a man who had had considerable share in shaping 
that policy with a little help from his quiet Canadian friend. 



While the task of building a secret organization in America had 
necessarily to be begun from scratch, Stephenson embarked 
upon it with four definite advantages. The first was his liaison 
with Hoover and the F.B.I., which he had previously arranged 
and which, as will be seen, was an essential pre-requisite of his 
work. The second was his acquaintance with a number of 
convinced interventionists, particularly Colonel Donovan, who 
were in a position to influence both United States public 
opinion and Government policy. The third was the goodwill 
of the Canadian authorities, who could give him considerable 
assistance which he needed. The fourth was the support which 
he enlisted immediately upon his arrival in the United States 
of the British Ambassador, Lord Lothian, who in the circum 
stances of the moment, when Britain was critically dependent 
upon American aid but could make no move to solicit it 
openly without playing into the hands of the isolationists, 
fully endorsed the need for an organization which, though 
independent of the Embassy, in effect constituted a covert 
counterpart of it. 

Philip Kerr, nth Marquess of Lothian, whom an educated 

1 Hull. II, 944, 



48 

American described at the time of his appointment in 1939 as 
'the first British Ambassador since Bryce who has been any 
thing but a diplomatic clerk', was a man of most attractive 
and brilliant personality, with fluent and persuasive gifts of 
speech, in spite of somewhat erratic religious beliefs he was a 
Roman Catholic turned Christian Scientist. 1 Indeed it was his 
insistence on summoning to his bedside a faith-healer from 
Boston instead of the Embassy doctor when he was suffering 
from a relatively minor ailment that was generally thought to 
have killed him. His sudden and unexpected death, which took 
place in Washington in December, 1940, came as a great shock 
to those who, like Stephenson, worked closely with him, and he 
was mourned alike by Americans and his own countrymen. In 
the words of the U.S. Secretary of State, Cordell Hull, 'his 
outstanding ability, his willingness and readiness to grasp our 
point of view and to represent that of his own Government, and 
his pleasing personality, made him an unsurpassed medium 
through which to carry on relations between the two Govern 
ments 9 . 2 The American Government accorded him burial in 
Arlington National Cemetery, a rare honour reserved for only 
one other British representative during the war. 3 Lothian was 
succeeded as Ambassador, after an interval, by Lord Halifax, 
with whom Stephenson worked amicably but neither so 
intimately nor so informally as he had done with Lothian. 

The man whom Stephenson would have liked to see above 
all others in occupation of the handsome red-brick building in 
Massachusetts Avenue, Washington, which Sir Edwin Lutyens 
had recently designed as the new British Embassy, was his 
buoyant compatriot and friend Lord Beaverbrook. Indeed 
Stephenson did some quiet lobbying on his friend's behalf, and 
in 1941 he was to work hard in informal discussions with Mr. 
Averill Harriman, who had been sent to London as President 
Roosevelt's Special Representative with the rank of Minister, 
to further the project of Beaverbrook's appointment to the 
post; for, like Harriman, Stephenson was keenly aware, to 
quote his own words, that 'Max was likely to achieve more 

1 Dr. Abraham Flexner, cited by Thomas Jones in A Diary with Letters 
(i54) at p. 433- 
* Hull. I, 874. 
8 Field-Marshal Sir John Dill. 



49 

with F. D. R. than Halifax, who was looked upon by the 
President as somewhat of a cold fish*. 

Stephenson admired Beaverbrook with more than ordinary 
enthusiasm, and he would hotly denounce any of his detractors 
and there were many whom he happened to encounter 
during this period. 'Little Bill' was wholeheartedly on the side 
of what he called the c war winners', a category headed in 
Britain by Churchill and Beaverbrook and in America by 
Roosevelt and Donovan. In Stephenson's eyes, as also in the 
Prime Minister's, Beaverbrook in the role of Minister of Air 
craft Production was the great hero of the e Battle of Britain 9 , 
and his almost superhuman achievement in replenishing the 
fighter squadrons with new and repaired machines fully 
justified the place in the War Cabinet to which Churchill had 
appointed him at the beginning of August, 1940. This was his 
hour', as the Prime Minister afterwards wrote. 1 Or, as Stephen- 
son was to put it in characteristic language to the author of 
these pages, 'but for the tremendous pressure that Beaverbrook 
exerted in his dynamic way, who could say whether the pitifully 
few aircraft that were flyable at the end of the battle in the air 
might not have been a minus zero force?' 

As an old and experienced fighter pilot himself, Stephenson 
shared Beaverbrook 5 s anxiety for the safety of his son Max 
Aitken in the battle, and also the father's pride in his son's 
record of conspicuous gallantry in the air. He particularly 
liked the tribute paid by a Canadian newspaper, which described 
them both as busily engaged in reducing the disparity between 
the British and German air forces. 'The father builds British 
machines, while the son destroys the German ones.' 2 

Another great war-time achievement of Beaverbrook, in 
Stephenson's estimation, was his 'personal triumph', in Washing 
ton in inducing President Roosevelt to 'paint with a very wide 
brush' at the commencement of the American war production 
programme. Indeed Stephenson considered this, at least as 
regards its long-term effects, to be even more important than 
his work at the Ministry of Aircraft Production in London, and 
Stephenson was to witness its execution at close quarters. 6 It 
fairly took my breath away/ he was to remark on learning of 

1 Churchill. II, 287. 

* Cited by Tom Driberg in Beaverbrook (1956), at p. 257. 



5 

the President's specific production objectives for the year 1942 
in respect of planes, ships, tanks and anti-aircraft guns, to the 
tune of fifty billion dollars, which he knew must tax the country's 
productive capacity to the utmost. In this Stephenson agreed 
with Beaverbrook's biographer and former employee, Mr. Tom 
Driberg, M.P., who was to write that 'probably nobody else, 
with his North American big-business background certainly 
no conventional, conservative Englishman could have talked 
round the hardest-headed and highest-powered industrialists 
in the United States. It was a feat that may stand for ever to 
his credit.' 1 

As Stephenson well knew, the President liked Beaverbrook 
and much admired his direct and positive methods in the then 
desperate situation that required these methods. Thus Roosevelt 
would have given him a particularly cordial welcome, if he had 
been appointed as the successor of Lord Halifax in Massachu 
setts Avenue. But any prospects of such a move were frustrated 
by Beaverbrook's complete breakdown in health and his con 
sequent resignation from the British War Cabinet early in 1942. 
Hence Halifax was to continue to serve as Ambassador until 
the end of the war. 

Besides helping to obtain the essential supplies, as has already 
been described, Stephenson's three primary concerns were to 
investigate enemy activities, to institute adequate security 
measures against the danger of sabotage to British shipping and 
other property, and to mobilize American public opinion in 
favour of aid to Britain. It was to fulfil these purposes- that his 
headquarters organization in New York was originally estab 
lished by him on the thirty-fifth and thirty-sixth floors of the 
InternationalBuildinginRockefeller Centre (630 Fifth Avenue), 
opposite St, Patrick's Cathedral. At first it operated under cover 
of the British Passport Control Office, and was inevitably small, 
although it was to grow rapidly as necessity required and 
opportunity offered. Apart from an Assistant Passport Control 
Officer and a senior SJ.S. officer, who was sent out from 
London and whose assistance proved of great value, it was 
staffed exclusively by men and women whom Stephenson 
recruited after taking up his appointment. With one or two 
exceptions none of them had any previous experience of secret 

1 Driberg. op. dt n 273. 



work, but were chosen by virtue of having held responsible 
positions in private or professional life or of possessing special 
knowledge which fitted them to undertake the various tasks 
involved. A number of officers and virtually all the secretarial 
staff were recruited in Canada. 

At the same time agents in the field were recruited, with the 
object of penetrating enemy or enemy-controlled commercial 
concerns, propaganda groups and diplomatic and consular 
missions, and Stephenson sent representatives to such key points 
as Washington, D.G., Los Angeles, San Francisco, and Seattle. 
But he was also quick to realize that the scope of his investiga 
tions could not logically be confined to the United States, for 
in the general purpose of obstructing Britain's receipt of 
American material assistance, the enemy could both attack and 
be attacked at other points in the Western Hemisphere. Accord 
ingly Stephenson established the closest liaison with the British 
Imperial Censorship, which had just sent out a detachment 
from England to Bermuda, where the American mail-carrying 
Clipper aircraft and ships were now calling on their voyages 
to and from Europe, and where the examination of these transit 
mails was to provide most valuable information on enemy 
activities of all kinds throughout America, north and south. 

Mr. (later Sir) Edwin Herbert, an energetic solicitor, had 
recently been appointed Director-General of the Postal and 
Telegraph Censorship in London, and he lost no time in visiting 
Stephenson in New York. Complete confidence was established 
between them, a relationship which was shortly afterwards 
extended by Stephenson to two of the most experienced officers 
in censorship,, the late Charles des Graz, Chairman of Sotheby's 
and his assistant, William Hill- Wood, of the London banking 
house of Morgan Grenfell, when they took charge of all British 
censorship operations in the Western Hemisphere on Herbert's 
behalf and established their headquarters in New York* Similar 
liaison arrangements were made with the Canadian security 
authorities, notably the Royal Canadian Mounted Police. 
Finally, Stephenson was put in direct communication by 
London with the existing British secret intelligence network, 
such as it was, in Latin America. But he soon discovered that 
most of these agents were hardly better equipped for their work 
than the Passport Control Office in New York had been at the 



52 

time of his first arrival. Stephenson therefore proceeded^ to 
reinforce the Latin-American organization by despatching 
representatives of his own to all the important centres in Mexico 
and Central America. 

In these early days of their collaboration Edgar Hoover and 
his F.B.L could not have been more co-operative. Clearly 
Stephenson's growing organization, employing as it did not 
only its own intelligence agents but what amounted to its own 
police force for the special protection of British property, repre 
sented an obvious threat to United States neutrality and could 
not have existed at all without the F.B.I.'s tacit approval. But 
Hoover was more than its licensor. He was in a very real sense 
its patron. He suggested its cover name, British Security Co 
ordination. Furthermore, he placed at Stephenson's disposal 
the F.B.L wireless channel which for many months was to 
provide B.S.C. with its only safe means of communication with 
London headquarters. On a personal basis he worked very 
closely with Stephenson to further what was then the wholly 
unneutral purpose of protecting and furthering British interests 
in the war against Germany and Italy, and he instructed his 
officers to assist B.S.C. in every way open to them. In short, 
Hoover led the F.B.L into the fully fledged alliance with British 
Intelligence that the President had urged. The results of that 
alliance are described in some detail later in this book. Mean 
while one or two examples, which belong to the early period 
of the Hoover-Stephenson collaboration, may conveniently be 
given here. 

In October, 1940, Hoover learned through his agents that 
$83850,000 worth of Italian funds,, drawn from banks in the 
United States by the Italian Embassy in Washington, were to be 
sent to Latin America in Italian diplomatic bags. This informa 
tion he discussed with Stephenson and they agreed that, while 
it might mean nothing more than a precautionary measure by 
the Italian Government against a possible 'freezing order 9 by 
the U.S. Treasury, there was a likelihood that the transfer was 
being made to finance subversive activities, particularly since 
the money had been drawn in bills of small denomination. 

Accordingly they planned joint counter-action. Hoover 
arranged for the personnel of the Italian Embassy to be kept 
under surveillance, and, when the couriers left by plane, for 



53 

F.B.I, agents to accompany them. There were three couriers 
in all, two consuls and an Embassy secretary. They travelled 
together as far as Brownsville, Texas, but there they separated. 
The consuls, who had $2,450,000 with them, went on to New 
Orleans, while the secretary, who had the balance of the money 
with him, boarded a train for Mexico City. 

Stephenson now cabled this information to his representative 
in Mexico City for immediate action. The representative was 
able to arrange for the secretary's bag to be opened under the 
authority of the head of the Mexican Police Intelligence Depart 
ment, and the money which was found inside confiscated. Such 
action was, of course, a violation of diplomatic privilege. When 
the Italian Minister protested, which he did with considerable 
vigour, the Mexican Government apologized politely for the 
stupid and unfortunate act of c a new and inexperienced clerk'. 
However, it placed the money in a blocked account, thus 
rendering it useless for subversive activities. The incident was 
later used, both in Mexico and afterwards in the United States, 
as covert anti-Nazi propaganda. 

Unfortunately the money being carried by the consuls 
escaped detention and control. British secret agents had made 
elaborate arrangements to purloin it at Pernambuco, but these 
were frustrated when the ship to which the couriers had trans 
ferred from New Orleans steamed on to Rio de Janeiro. Here 
the Brazilian Foreign Minister, forewarned of the arrival of 
the money, had agreed to give it his special protection; and, 
despite a subsequent assurance to an influential British contact 
in Rio that the money would be controlled, he kept his promise 
to the Italians by ensuring its safe delivery to their Embassy. 
This joint operation by Hoover's and Stephenson's men was, 
therefore, only partly successful. But it was sufficiently effective 
to discourage the Italians from any further attempts to transfer 
funds by covert methods to South America. 

It speaks much for Hoover's courage and foresight that he 
was persuaded to co-operate so wholeheartedly with Stephen- 
son. The very fact of his insistence upon knowledge of the 
liaison being kept secret from the State Department, as has 
been seen, showed that he was running a considerable risk when 
he agreed to it. That risk was the chance that his connection 
with British Intelligence would be exposed and would thus 



54 

embroil him, as it would certainly have done if it had been 
detected, in a major political scandal with every isolationist 
and non-interventionist in the country after his scalp. At the 
same time he realized that the time must come sooner or later 
when the continued existence of the F.B.I . would depend not 
only on its success as a law-enforcement agency but on its 
record in the extended field of counter-espionage and security 
intelligence. It was in his necessary preparations to meet this 
public challenge that Hoover needed information and assistance 
of the kind that Stephenson with his unique resources was able 
to supply. 



About the time Stephenson first met Hoover, the F.B.I, was 
entrusted by President Roosevelt with responsibility for collect 
ing secret intelligence of subversive activities throughout the 
Western Hemisphere likely to endanger United States security, 
and for the preparation of adequate preventive measures against 
potential spies and saboteurs. It was a responsibility which 
Hoover welcomed, since it represented a considerable addition 
to the prestige and influence of the F.B.I., whose interests its 
ambitious Director was always most zealous in promoting. But 
he was severely handicapped in discharging this new respon 
sibility by the Neutrality Act. 

Unlike the British S.LS., the American F.B.L was obliged 
to operate in the fierce glare of the public scrutiny. To enable 
it to function as a secret intelligence organization Hoover 
needed the support of Congress, but this support was not 
forthcoming. Hoover had no legal right to employ any agents 
outside United States territory. As a result, he was forced to 
act surreptitiously without the knowledge of the State Depart 
ment and the official United States missions in Latin-American 
countries. His legal authority was limited to counter-espionage 
in the United States, and even in this he was debarred from 
access to sources of information which were vital to his work. 
For example, there was no domestic censorship of mails or 
cables then in existence, and so F.B.I. agents were reduced to 
purloining letters from Post Offices. Had this illicit action been 
exposed, and proved unjustified in any particular instance, it 



55 

would have caused political repercussions of sufficient magni 
tude to place in jeopardy the continued existence of the organ 
ization or at least of Hoover as its Director. Another handicap 
was reflected by a recent decision of the U.S. Supreme Court 
declaring inadmissible in legal proceedings evidence obtained 
through the unauthorized interception of telephone conversa 
tions or c wire tapping' by F.B.L agents, regardless of whether 
the intercepted conversations endangered the national security. 
Thus Hoover was caught between his anxiety to carry out the 
President's directive in the light of the urgent need for American 
military preparedness on the one hand, and the almost fanatical 
insistence by a large proportion of the legislature in preserving 
American neutrality on the other* 

Stephenson helped Hoover to escape from this dilemma by 
throwing open to him and his staff all the manifold resources 
of British secret intelligence, which had been developed under 
the impetus of war. He arranged for two of the Bureau's senior 
officers to visit London headquarters, where they received a 
detailed briefing in Nazi espionage methods, and subsequently 
for one of Hoover's Assistant Directors to visit the various 
British S.I.S. centres in Latin America and discuss with the 
officers-in-charge the creation of an F.B.L field organization in 
that area. Through Stephenson's intimate relations with the 
British Imperial Censorship authorities, it was possible for an 
experienced F.B.L agent to be sent to the Bermuda station and 
instructed in the techniques of mail examination. F.B.L 
laboratory technicians were also made acquainted by one of 
the Bermuda experts, a woman who had joined Stephenson's 
New York staff, with the various methods of secretly examining 
letters in such a manner that their recipients were not aware 
that they had been opened. This highly secret process included 
the unsealing and resealing of diplomatic and other privileged 
mail so that the seals appeared absolutely intact and were 
impervious to the ultra-violet ray and other chemical tests. 

Recruitment of staff by the F.B.L for this confidential and 
delicate work led to an amusing incident. British experience 
had shown that the work which demanded a high degree of 
manual dexterity was best undertaken by women. Numbers of 
potential female recruits were interviewed by an Assistant 
Director at the Washington Headquarters of the Bureau, but 



56 

the details of the work obviously could not be explained to 
them at this stage in case they should be found unsuitable. 
Stephenson's Bermuda expert had given the Assistant Director 
a rough-and-ready rule, which was that a girl with neat ankles 
would be most likely to possess the required degree of manual 
dexterity for the job. The only thing that those interviewed 
were told was that the work involved was of a confidential 
character, and that they might be called upon to perform it in 
South America. Consequently several of them were consider 
ably surprised when they found that the preliminary 'screening' 
consisted of a minute inspection of their ankles by an elderly 
G-man, and they began to speculate with some uneasiness as 
to the precise nature of the services expected of them in such 
places as Buenos Aires or Rio. Those who seemed particularly 
worried had their minds set at rest by being assured that it was 
not that kind of job! 

Although Stephenson gave Hoover all the intelligence from 
secret sources that he was able to obtain at this period, not all 
of it was of direct interest to the F.B.I. Some of it concerned 
the intelligence branches of the Navy and War Departments, 
that is the Office of Naval Intelligence (O.N.I.) and the 
Military Intelligence Division (G.a). Hoover in turn passed on 
this particular information to O.N.I, and G.2, since Stephenson 
had no liaison with these service branches which at this time 
were opposed to the idea of collaborating with the British. In 
any event. Hoover was glad to do this, as it increased the 
Bureau's prestige and influence and gave its Director a com 
manding position in the existing framework of American 
intelligence. Hoover was also encouraged on occasion to invoke 
the help of the service departments on behalf of the British 
even when it ran counter to the State Department's strict 
policy of neutrality. The following incident, which took place 
in the autumn of 1940, provided a good example of such 
intervention. 

Stephenson's representative in Mexico City reported that he 
had reason to believe that four German and twelve Italian 
ships, which were then lying in the Gulf ports of Tampico and 
Vera Cruz, were planning to run the British blockade. It 
certainly looked as if the Axis vessels might succeed in their 
intention, since the Royal Navy could not patrol Mexican 



57 

territorial waters. Stephenson passed this information to Hoover 
for onward transmission to O.N.L At the same time he informed 
his London headquarters, who authorized the taking of any 
action he might consider appropriate in the circumstances 
provided the British Embassy in Washington was told what was 
happening. Stephenson now sent his representative in Mexico 
a quantity of e limpet' bombs small explosive charges to be 
affixed to a magnetized frame which would adhere to the steel 
plates of a ship's hull. However, while these provided a possible 
means of causing sufficient damage to delay the vessels* 
departure, it was only a temporary measure, and it was clear 
that no really effective steps could be taken without the assist 
ance of the U.S. Navy Department. Accordingly, after discuss 
ing the matter with Lord Lothian, Stephenson went to Hoover 
and, having explained the position to him, begged him to 
arrange for the despatch of a naval patrol to the area of the 
Gulf ports. Hoover agreed, since besides helping his British 
friends he considered it an excellent pretext for securing some 
return from O.N.L for the information he had been supplying 
from British sources. After meeting with considerable difficulty, 
he eventually won round the State Department which agreed 
to the plan on the strict understanding that no act should be 
committed which might conceivably be construed as a breach 
of American neutrality. Four destroyers were accordingly 
despatched to the Gulf with orders to lie off Tampico and 
report by radio en clair that is, not using code or cipher any 
movements which the Axis ships might make. 

On the night of November 15, 1940, the four German 
vessels steamed out of port into the Gulf of Mexico. The 
American destroyers approached and trained the full battery 
of their searchlights upon them. This was not in itself a 
belligerent act, but it had the effect of making the German 
captains think that it was the prelude to an all-out attack. 
Panic ensued, in the course of which one of the German ships, 
the Phrygia^ either caught fire accidentally or was deliberately 
scuttled. Anyhow her crew took to the boats and she was 
abandoned as a total wreck. The others turned tail and 
promptly put on full speed and steamed back to port. Intelli 
gence reports subsequently revealed that the German captains 
believed that they had encountered some of the old destroyers 



58 

which had recently been transferred to Britain; they had 
informed acquaintances in Tampico next day that they 'had 
been ordered to surrender by British warships'. 

A fortnight later, two of the three remaining German ships 
sailed out to sea in broad daylight. The American destroyers 
shadowed them and, by transmitting position signals, enabled 
vessels of the Royal Navy to intercept them before they had 
got very far and to take them as prize. The one German and 
twelve Italian ships which had stayed behind were apparently 
too intimidated to make any further attempt to run the 
blockade. They remained impotent in port until they were 
eventually taken over by the Mexican Government in April, 



. 
This incident, which did not even indirectly concern enemy 

subversive activities, showed that Hoover was willing to carry 
his assistance well beyond what he might justifiably have 
regarded as the limits of his common interest with Stephenson 
at this time. Indeed it may fairly be said that he was in the war 
from the moment that they began their coUaboration. He also 
undertook to 'plant 3 what was known in technical language as 
'strategic deception material' in the German Embassy in 
Washington. One example of this, designed to deter Hitler 
from embarking upon any large-scale military campaign, read: 
'From highly reliable source it is learned ILS.S.R. intend 
further military aggression instant Germany is embroiled in 
major operations.' A similar piece of information calculated to 
mislead the Germans was to the effect that in the event of their 
using poison gas Britain would retaliate by using their 'secret 
weapon 9 . This was said to consist of 'some kind of glass^balls 
containing chemicals producing such terrific heat that they 
cannot be extinguished by any known means'. 

Finally, as we have seen, Hoover suggested the cover name 
which was adopted by Stephenson's organization, when, to 
comply with American law, it was registered with the State 
Department as an official foreign agency in January, 1941. 
Its overt purpose was expressed as follows: 

Consequent upon the large-scale and vital interests of the 
British Government in connection with the purchase and ship 
ment of munitions and war material from the United States, 
coupled with the presence in this country of a number of 



59 

British official missions, a variety of security problems has been 
created, and these, affecting closely as they do the interests of 
the British Government, call for very close and friendly col 
laboration between the authorities of the two countries. 

Thus, for example, the presence in large numbers of British 
and Allied ships engaged in loading explosives and other war 
materials, and the existence of large quantities of similar 
materials in plants, on railways and in dock areas throughout 
the country, presenting as they do a tempting target to 
saboteurs and enemy agents, constitute in themselves a security 
problem of considerable magnitude. 

With a view to co-ordinating the liaison between the various 
British missions and the United States authorities in all security 
matters arising from the present abnormal circumstances, an 
organization bearing the title British Security Co-ordination has 
been formed under the control of a Director of Security 
Co-ordination, assisted by a headquarters staff. 

Such, in broad terms, was the nature and scope of the 
assistance which Edgar Hoover was persuaded to render 
William Stephenson and the British war effort at this period. 
But it should be remembered that this assistance, whilst 
willingly given, was always conditioned by Hoover's great 
ambition for the Bureau which he directed. Unhappily this 
was to lead him, after his country entered the war, into the 
untenable position of insisting in effect upon retaining for the 
F.B.I., among United States Intelligence agencies, monopoly 
of liaison with B.S.C. It was an untenable position, which 
Hoover was with some reluctance eventually brought to 
realize, because the F.B.I, was not recognized as a co-ordinating 
centre of American war-time intelligence and in its sphere of 
operations it was limited to the Western Hemisphere. 



CHAPTER III 



SPIES, SABOTEURS AND 
PROPAGANDISTS 



DURING the period before the Japanese attack upon Pearl 
Harbour brought the United States into the war at the end of 
1941, and particularly before the passing of the Lend-Lease 
Act in the spring of that year, Britain was in the position of 
having a vast amount of her resources of production, supply, 
shipping and foreign investment situated in a country which 
was under no obligation to protect them. Yet it was vital to the 
British war effort that they should be protected, and it was for 
this express purpose that Stephenson's intelligence organization 
was officially recognized in the United States under the title of 
British Security Co-ordination. Some details of how these overt 
functions came about and how they were successfully carried 
out may conveniently be given here. 

At this time there were six million German-speaking 
Americans and four million Italian-speaking Americans in the 
United States. Many of these American citizens were employed 
as workers in factories producing war material as the result of 
orders placed by the British Purchasing Mission in New York. 
Some of them were labourers in the freight yards or employees 
of the railways which transported the finished product, and 
others were stevedores engaged in loading it into British ships. 
Before B.S.C. took over its overt security job, there was little to 
prevent a wide-scale sabotage campaign in the private factories 
producing arms for the British account, or against a large 
proportion of Britain's twenty million tons of shipping which 
used American ports. Moreover, Stephenson had reason to 
believe, on the basis of the German sabotage record in the 
First War, that the resources of the enemy in the United 
States, coupled with the potentially subversive elements already 

60 



6i 

in existence there, were ample for this task. (He was not to 
know, however, that these resources were in fact destined never 
to be used on anything like the scale of the sabotage in the 
1914-18 conflict.) 

Enemy agents were scattered throughout the forty-eight 
states, and each one knew well that he could rely upon the 
assistance of many thousands of members of the German Bund 
organizations. And there were others who were willing to help. 
There were the isolationists; there were the business men with 
European interests; there were the nationalist Indians, the 
anti-British Irish and, in increasing volume, the Communist- 
inspired left-wing propagandists who denounced the Imperialist 
war' while Soviet Russia was still apparently on friendly terms 
with Germany. The Communist-dominated National Maritime 
Union of America was bitterly attacking the despatch of United 
States ships into the war zones and any form of American 
intervention. The Union's lawyers had developed various 
ingenious techniques of delaying the sailing of Allied vessels 
from American ports by suborning members of Chinese and 
other crews to refuse to sail without new and extravagant 
equipment. All these groups and organizations were giving 
help, either directly or indirectly* to the Nazis. 

By the summer of 1940 the Purchasing Commission under 
the direction of Arthur Purvis, had taken some tentative steps 
to meet the threatened danger. It had appointed a Security 
Officer in the person of an English business man, Mr. Hamish 
Mitchell. 1 Also a Credit Investigation Section and a Shipping 
Security Section had been formed within the existing staff of 
the Commission. The former endeavoured to establish the 
reliability of firms working for British account. The latter took 
what measures it could to insure the safe loading of supplies 
from wharf to ship. But their resources and facilities were meagre 
and fell far short of what was required in the circumstances. 
This was a security organization, distinct from Purvis's mission 
but at the same time closely linked with it, which would be able 
to advise on security and anti-sabotage precautions for factories, 
railways, shipyards and docks; to investigate and report upon 
sabotage and other subversive activities, Communist influence 

1 Mr. Mitchell later went as Stephenson's representative to Bermuda, 
where he rendered valuable service. 



62 

amongst labour unions and the suborning and desertion of 
crews; to Vet 3 the reliability of manufacturing companies and 
also of individuals applying for jobs in British missions in the 
U.S.A.; and finally, to establish the closest possible liaison 
with the American and Canadian security authorities, notably 
the F.B.I., Royal Canadian Mounted Police, the Customs and 
Immigration, and the local police and port officials. 

Purvis was only too pleased to hand over these responsibilities 
to Stephenson. These were now assumed by the Security 
Division of B.S.C. which absorbed the old Credit Investigation 
and Shipping Security Sections of the Purchasing Commission. 
At the same time the Passport Control Office ceased to provide 
'cover 5 for Stephenson's clandestine activities, which insofar as 
they concerned his headquarters staff were henceforth carried 
out by the Statistics and Analysis Division of B.S.C. in Rocke 
feller Centre, although as a matter of convenience the ordinary 
functions of passport control relating to the granting of British 
visas to foreign applicants continued to be discharged on the 
same premises. 

With Purvis's help, Stephenson was able to find accommoda 
tion for the Security Division in the Cunard Building at 15 
Broad Street, which also housed the Purchasing Commission 
besides the offices of various shipping companies. He was also 
fortunate in finding the ideal person to take charge of what 
came to be known as B.S.C.'s downtown office in Sir Connop 
Guthrie, a shrewd and genial English baronet with great 
personal charm as well as considerable shipping experience. 
There was something faintly suggestive of the Prussian officer 
in Guthrie's distinguished bearing and handsome appearance; 
in fact he had held a commission in the Grenadier Guards 
during the First World War. As head of the Security Division 
of B.S.C., he was a great success and deservedly popular on the 
New York waterfront as well as in society. (He was a great 
diner-out, and it was while about to join a dinner party in 
Claridge's Hotel in London a few months after the end of the 
war in 1 945 that he died as the result of a sudden heart attack.) 

Another Englishman, also a baronet, who was a great help 
to Stephenson, and incidentally to Guthrie, in the work of the 
Security Division, was the Wall Street banker Sir William 
Wiseman, who had been in charge of the same security job a 



63 

quarter of a century before In the First World War as a mem 
ber of the Purchasing Commission of the British Ministry of 
Munitions. Wiseman's duties had also included intelligence 
and counter-espionage, so that Stephenson was able to draw 
upon his experience as well. 1 It Is worth noting that Wiseman 
considered that Stephenson had a much more difficult task 
than he himself had had a quarter of a century earlier. 'The 
Germans were far better organized In World War Two 5 , 
Wiseman recently recalled, not long before he died. *I gave 
him what help I could. 5 As will be seen, Wiseman was to show 
that he had not lost his old touch. 

Before America entered the war, British orders for war 
materials amounted to some $4,000 millions, of which about 
three-quarters were invested in plants and extensions of existing 
plants owned by the British Government. It was the duty of the 
Security Division to safeguard these assets In every way possible. 
The first step was to Vet 5 the firms producing the war materials. 
In order to do this, the British Purchasing Commission, when 
ever any contract was in process of negotiation, would approach 
the Security Division and ask for a check to be made on the 
contractor from two points of view. First, was he financially 
reliable? Secondly, was he completely free from any connection 
with the enemy? The first check was made through credit 
agencies, banks and financial houses; the second through 
direct investigation and by obtaining all possible help from the 
F.B.L and other U.S. Government agencies. 

After the firm had been Vetted 5 and the contract signed, It 
was necessary to make sure that the factory producing the war 
material was secure. Here advantage was taken of an existing 
clause in all British contracts with American firms, which 
provided for technical inspection of the product at various 
stages of manufacture and upon its completion. These inspec 
tions were carried out by the Inspection Board of the United 
Kingdom and Canada, with headquarters in Ottawa, an office, 
in New York, and a large technical staff in the field. Guthrie 
established liaison with this field staff and secured the assistance 
of one of the Board's administrative officers, who was later 

1 An Interesting account- of Wiseman's work in the First World War has 
been given by Sir Arthur Willert in The Road to Safety (1952)- Wiseman died 
in 1962. 



6 4 

seconded to the Security Division. This officer's particular duty 
was to visit all factories working for Britain, to safeguard the 
welfare of the resident inspection staff and settle a large^variety 
of other personnel problems. In collaboration with him, the 
Security Division prepared a standard form covering the security 
status of each factory, which was completed by the inspectors. 
At the same time independent reports were made on the 
efficacy of the protective measures. Thus the Security Division 
was able to make a complete survey of all British contracts 
placed with United States factories and to check the security 
conditions prevailing in each plant. 

It must be remembered that B.S.C. had no legal authority to 
enforce any security measures in United States factories in 
United States territory, and before the passing of the Lend- 
Lease Act little or no assistance was forthcoming from the 
military authorities. B.S.C., therefore, approached the manu 
facturers on its own initiative, and although it was obviously 
necessary to exercise great care and tact, the Security Division 
eventually succeeded in persuading nearly all of them to co 
operate in taking every possible precaution against sabotage in 
their plants. At the same time Purvis agreed to adopt a sabotage 
clause in the Purchasing Commission's standard form of con 
tract. In this clause the manufacturer undertook to maintain all 
reasonable precautions against sabotage and to advise the Pur 
chasing Commission of any actual or attempted sabotage in his 
factory. In this he was assisted by a list of recommendations 
which was issued by B.S.C. to all American plants working for 
British account, and which gave advice upon how to prevent 
the infiltration of potential saboteurs. 

The next steps were to get the material safely from the 
factory to the wharf and then safely loaded on board ship. 
For the former purpose officers of the Security Division of 
B.S.C. kept a twenty-four hour watch, with the knowledge and 
approval of the local police and fire departments, port control 
officers and coast guards. For the latter purpose, which 
required particular skill in the handling of dockers and seamen 
who were apt to be 'difficult', Stephenson with Guthrie's 
advice recruited officers with wide experience of merchant 
shipping as well as knowledge of local conditions. These men, 
known as Consular Security Officers, were appointed in New 



65 

York, Boston, Philadelphia, San Francisco and a dozen other 
United States ports, at which 95 per cent, of British ships 
called. Their duties included the guarding against the entry 
aboard of saboteurs in the guise of visitors, repairmen, steve 
dores and ship-chandlers; the checking of anti-sabotage 
equipment, such as screens and nets; the protection of seamen 
from the attention of those anxious to learn their secrets, and 
the suppression of news of ships* cargoes, movements and 
convoys. In 1941, the system was extended to twenty-six of the 
principal ports in South America. 

Probably the most exposed port area was in New York, 
where an enemy agent merely had to take a trip on the Staten 
Island ferry to see where British ships were berthed and when 
they sailed as indeed one such agent testified at an espionage 
trial. The Consular Security Officer in New York, who had 
ten assistants, divided the harbour into three zones. A round- 
the-clock watch was kept on each of these zones by members 
of his staff who reported hourly by telephone to a central 
number. Continuous eight-hour watches were kept upon the 
two most important British merchant vessels, the Queen Mary 
and the Queen Elizabeth,, whenever they were in port. In their 
case, as indeed in that of aU other British ships in American 
ports, the closest attention was paid to the prevention of 
smoking and to the exclusion of unauthorized visitors and 
anyone under the influence of alcohol. A pass system was 
rigorously enforced; workmen and crew were searched both 
on embarking and going ashore; and all packages and tool 
kits were inspected. 

At the height of the war B.S.C. was employing thirty-one 
Consular Security Officers with their staffs in the United 
States and forty-five in South America. Together they carried 
out approximately 30,000 anti-sabotage inspections a year 
aboard British merchant ships. In the result not a single 
British vessel was lost or seriously held up by sabotage in a 
United States port throughout the war. After the French 
liner Normandie caught fire and capsized in New York harbour 
in February, 1942 because sparks let fly by a welder ignited 
a heap of lifebelts filled with kapok inquiry showed that of 
the Security Division's eight recommendations regarding 
welding practice, copies of which had been supplied to the 



66 

Captain of the Port of New York, no less than five were being 
ignored. 

Second only to the preservation of the ships was the saving 
of tonnage time by effecting the quickest possible turn-round 
in the various ports of call. This was insured partly by the 
G.S.O.'s who were able to arrange with local police to return 
drunken seamen on board rather than hold them in jail 
(occasionally they organized this operation themselves), and 
partly by the excellent relations which Sir Connop Guthrie 
had established with the British National Union of Seamen, 
whose delegates in America helped to solve labour disputes 
and weed out trouble-makers among the crews. Seamen would 
complain that they were unfit for work, that their ship was 
dirty or unseaworthy, that their officers were harsh and so 
forth. The union delegate would investigate. If they were 
found to be malingering or exaggerating, he had the authority 
as their union representative to reject their complaint. On the 
other hand, if there was any justification for it, he reported it 
to the local C.S.O., who in turn informed B.S.C. headquarters, 
and action was taken to satisfy it. The fact that the Minister 
of War Transport in London, Lord Leathers, was a close 
personal friend of both Stephenson and Guthrie greatly 
facilitated the working of all these arrangements. 

Occasionally there was a complaint from a local source, 
which caused an official protest to be made by the State 
Department. Mr. Sumner Welles, the Under-Secretary of 
State, was to relate an embarrassing incident at Baltimore 
concerning some vessels of the Danish Merchant Marine, 
which were under charter to the British Ministry of War 
Transport after the German occupation of Denmark, although 
they continued to be manned by their Danish crews. This is 
how he described it: 

When the ships were due to sail it was learned that a 
considerable number of Danish seamen were not to be found. 
They were scattered throughout the numerous taverns on 
Baltimore's waterfront. Thereupon some zealous officials of the 
British Intelligence hired a quantity of trucks, manned them 
with the necessary number of British naval shore police and, 
with a blithe disregard for the local American authorities, 
proceeded from bar to bar and by main force dumped all the 



6 7 

alleged Danish deserters they could find into the trucks for 
return to their ships. When the municipal authorities in Balti 
more heard of this they promptly telephoned to me. I as 
promptly notified the British Ambassador. Lord Halifax, need 
less to say, had received no news of the occurrence, let alone 
any intimation that such action was to be taken. He was aghast 
at the reaction that might be provoked, even in war-time, if 
the American public learned of so flagrant a violation of 
American sovereignty, and one so painfully reminiscent of the 
British impressments of colonial days. 

Neither Guthrie nor Stephenson was one to stand on diplo 
matic niceties at a period when Britain's Atlantic lifeline was so 
tenuous. However much Sumner Welles and his more appre 
hensive colleagues in the State Department may have been 
reminded of the press gang, the fact remains that valuable 
time was saved by the use of its unorthodox methods on this 
occasion, and the much-needed ships sailed with a minimum 
of delay and a near full crews' complement. 1 

By none perhaps was the success of the Security Division's 
efforts more appreciated than Arthur Purvis, whose Commis 
sion purchased the material protected. Unfortunately he barely 
lived long enough to see the results of these efforts in action. 
Recalled to London for consultation in the middle of 1941, he 
was suddenly summoned with Lord Beaverbrook to attend the 
historic meeting which took place between Churchill and 
Roosevelt in Placentia Bay, Newfoundland, in August, when 
the Atlantic Charter was formulated. The presence of Purvis 
and Beaverbrook at the discussions was required to cope with 
the delicate question of how supplies were going to be divided, 
now that Soviet Russia had become an active partner of the 
Allies. 

What happened is best described in the Prime Minister's 
words. 'Beaverbrook and Purvis started from Prestwick in 
different aeroplanes within a few hours of one another. It was 
an even chance who went in either plane. Beaverbrook arrived 
safely at the Newfoundland airport, and joined me after a long 
train journey on the isth. Purvis and all with Mm were killed 
by one of those sinister strokes of fortune which make a plane 
fly into a hill of no great height a few minutes after taking off. 

1 Sumner Welles. Seven Major Decisions (1951), at p. 61. 



68 

Purvis was a grievous loss, as he held so many British, American 
and Canadian threads in his hands, and had hitherto been the 
directing mind in their harmonious combination. When Max 
(Lord Beaverbrook) arrived I told him the shocking news. He 
was silent for a moment, but made no comment. It was war 
time.' 1 



The German secret intelligence service, known as the Abwehr, 
was directed by a retired naval officer, Admiral Wilhelm 
Canaris. A certain air of mystery has always surrounded 
Canaris, and it has been suggested that he was really working 
for the British from the beginning of the war. The fact remains 
that he was a monarchist by conviction and consequently 
opposed to Hitler and the leading Nazis, particularly Gestapo 
Chief Himmler, who subsequently contrived his arrest and 
execution after torture in a concentration camp. However, 
although Canaris was an anti-Nazi, it is unlikely that a man 
with his traditional service background was anything other 
than a conscientious German patriot. At all events, he ran 
the Abwehr with skill and determination in spite of persistent 
interference from the Nazi high-ups. 2 

The Abwehr organization was divided into three sections, 
which were concerned respectively with espionage, sabotage 
and counter-espionage. The head of Section II (Sabotage), 
Colonel Erwin Lahousen, was an Austrian, who had previously 
been in charge of Austrian espionage and had worked with 
Canaris against the Czechs. It is now known from captured 
Abwehr documents that plans for sabotage in America were 
drawn up at the beginning of the war by Canaris and Lahousen 
which included the smuggling of explosives into British ships 
lying in American harbours. But Hitler, it appears, was 
opposed to carrying out these and similar plans, being of the 
opinion that the material advantage to be gained would not 
outweigh the political disadvantage in the .circumstances of 
United States neutrality. In April, 1940, he ordered Canaris 

1 Churchill. II, 396-7. 

2 On Canaris, see Ian Colvin, Chief of Intelligence (1951) and Paul 
Leverkuehn, German Military Intelligence (1954). 



69 

to leave America alone; in the following month the order was 
repeated and at the same time instructions were given to recall 
the only experienced and reliable sabotage agent the Abwehr 
had in the United States at that time. 

The Germans did possess one agent of dubious repute 
named Rekowski, who operated from Mexico under com 
mercial cover after the passing of the Lend-Lease Act he 
claimed to have blown up several ships 'by means of high 
connections he had 3 and to have set fire to a rubber dump in 
Ohio, whether or not with the consent of Hitler is unknown. 
But late in April, 1941, he was chased out of Mexico, where 
his relatively small-scale activities so alarmed the German 
Foreign Office, which thought that any further acts of sabotage 
might bring the United States into the war, that Canaiis was 
again asked to lay off, this time by Ribbentrop. According to 
Canaris's German biographer, the chief of the Abwehr responded 
to this request with alacrity, arguing that if Nazi party fanatics 
were to reproach him in the future with 'having left the United 
States too much in peace', he would be able to refer to the 
arguments which the Minister of Foreign Affairs had himself 
employed. 1 

However true Sir William Wiseman's remark may be 
generally about the superior organization of German intelli 
gence in America in the Second World War compared with 
the First, it would hardly seem to apply to the operations of the 
Abwehfs Section II. Certainly the latter achieved nothing 
comparable, for example, to the famous 'Black Tom* explosion 
in Lower New York Harbour in July, 1916, when thirty-seven 
loads of high explosives, several warehouses, a dozen barges 
and ships and a whole railway station and yards were blown 
up in one terrific detonation. Had the Germans possessed a 
sabotage organization ^n America under the efficient direction 
of a man like Captain Von Rintelen as they did in the First 
War, the precautions taken by B.S.C.*s Security Division would 
have been much more hampered and less effective thaa they 
were proved to be in the event. Of upwards of 20,000 cases of 
suspected sabotage which the F.B.I. investigated during the 
Second World War, Hoover claimed that not a single case of 

1 Louis de Jong. The German Fifth Column in the Second World War (1956), 
pp. 214-5. 



70 

enemy directed sabotage was established. For the most part, 
they were industrial accidents caused by fatigue, carelessness, 
horseplay among the workers, and occasionally spite. 1 

The only attempt at active sabotage which the Germans 
made after America had entered the war was a complete 
fiasco. Early in 1942, Canaris received instructions from Hitler 
to cripple the American production of aluminium. Since no 
organization for sabotage existed in America at the time, 
agents had to be recruited and sent from Germany, an operation 
in whose success it appears that neither Canaris nor Lahousen 
had much faith. Nevertheless the Fuehrer's orders had to be 
obeyed, and accordingly on May 28, 1942, eight agents were 
landed by submarine in groups of four at two different points 
on the eastern American seaboard. Two of the prospective 
saboteurs promptly gave their comrades away to the F.B.I., 
thereby saving their own skins, while the remainder were 
rounded up and in due course sent to the electric chair. 'It 
was the biggest failure that ever occurred in my section/ 
General Lahousen recalled with a sigh after the war was 
over. 2 

As will be seen, the Germans had some success in the field of 
espionage and still more in other subversive activities, par 
ticularly propaganda directed against Britain and designed to 
frustrate projected American aid and keep the country out of 
the war. Some of these activities were organized under cover of 
the German Embassy in Washington by specially accredited 
high-grade agents such as Dr. Gerhard Alois Westrick, who 
arrived in New York from Japan in the spring of 1940, about 
the same time as Stephenson. Westrick held the diplomatic 
rank of Commercial Counsellor at the Embassy and as such was 
registered with the State Department. But he lived in an ex 
pensive rented house in Long Island, New York, where he 
entertained important American business men, particularly 
those in the oil industry. Stephenson, who began to investigate 
his activities in June, 1940, discovered that he was also visited 
by a number of comparatively obscure young Americans of 
German descent who were employed in strategic factories. 
Westrick was interested in a number of commercial concerns, 

1 Don Whitehead. The F.B.L Story (1957), at p. 176. 
8 De Jong, 216. 



7* 

including the International Telephone and Telegraph Com 
pany, and in one of them he was a partner with Heinrich Albert, 
who had been an active German propagandist in America 
during the First War. 

One of Westrick's chief contacts was president of a certain 
oil company which was suspected of supplying the Axis with 
oil through the British blockade. It is significant that Westrick 
described himself as an employee of this company, and in 
applying for a driving licence gave its office as his business 
address. At a banquet given in Westrick's honour in New York 
to celebrate the fall of France, the company president was also 
present. It was evident that Westrick's purpose was to convince 
American big business that the war had already been won by 
Germany and to enlist its support for the isolationist campaign. 
The industrialists 5 rewards were to be commercial privileges in 
in Axis-dominated Europe. 

These facts were passed by Stephenson, through an inter 
mediary, to the New Tork Herald-Tribune, where they made a 
first-class news story and were expanded to form a series of 
articles. These in turn led to the publication of numerous 
editorials throughout the country on the dangers of a hidden 
Fifth Column, with particular reference to the fall of France 
which was attributed to German corruption of her business men 
and politicians. 

The repercussions of these disclosures were immediate, 
Westrick was deluged with abusive letters and telephone calls. 
A hostile crowd gathered outside his house, and although he 
endeavoured to pacify it by playing 'God Bless America* and 
The Star Spangled Banner 5 on his gramophone, the F.B.I. had 
nevertheless to provide Mm with a twenty-four-hour guard. 
Eventually his landlord asked him to leave the house. His driv 
ing licence was revoked because he had described himself in 
applying for it as 'not crippled 9 , whereas the Herald-Tribune had 
revealed that he had lost a leg. Finally the State Department, at 
the instigation of the F.B.L prompted by Stephenson, requested 
the German Government to recall him for pursuing activities 
unfriendly to the United States, with the result that by the end 
of August, 1940 he was on his way back to Germany on a 
Japanese ship. 

The Herald-Tribune was warmly congratulated on having 



72 

smoked out a dangerous emissary of Adolf Hitler, and there 
was even a proposal that the journal should receive the Pulitzer 
Prize for its good work. Meanwhile the shares of the oil company 
slumped sharply, and its president in alarm for his own future 
assured the press that he was thoroughly pro-British. Neverthe 
less he was forced to resign his office after a stormy stockholders' 
meeting; and, although he remained active in the oil business, 
henceforward he presented no further problem to British 
security intelligence. 

The large numbers of Americans of German descent and 
citizens of German birth there was over a quarter of a million 
of these Reichsdeutscker in the United States provided a con 
venient channel for enemy propaganda. As early as May 16, 
1940, when France was falling, President Roosevelt had warned 
Congress of the treacherous use of the Fifth Column by which 
'persons supposed to be peaceful citizens were actually a part 
of an enemy unit of occupation', and ten days later he had 
followed this up with a fireside chat on the radio in which he 
had pointed out to his American listeners that the country's 
safety was not only menaced by weapons. 'We know of new 
methods of attack', he said, 'the Trojan Horse, the Fifth Column 
that betrays a nation uprepared for treachery. Spies, saboteurs 
and traitors are the actors in this new tragedy.' 1 

But the President's warnings had been largely unheeded by 
his countrymen. On the contrary, 'patriotic societies' had sprung 
up throughout the country devoted ostensibly to serving the 
interests of 'Americanism', of which the wealthy and powerful 
America First Committee became the most important. Dozens 
of these interlocking isolationist organizations held mass meet 
ings, issued pamphlets and news-sheets, trained street corner 
speakers and organized 'educational' meetings under the 
auspices of existing clubs. In Detroit Lord Halifax was pelted 
with eggs and ripe tomatoes which were thrown with astonish 
ing accuracy by isolationist women. ('We do not have any such 
surplus in England', said the Ambassador dryly, showing the 
Englishman's traditional stiff upper lip.) 'It is not freedom of 
the seas that England wants', an isolationist senator told three 
thousand people in Brooklyn while a similarly minded Congress 
man declared before an equally large audience that 'the 
iDeJong. 105. 



73 

present war was brought upon the Third Reich by England 
and France 5 . Only a few months before Pearl Harbour, Colonel 
Lindbergh, one of the most prominent members of the million- 
strong America First organization, publicly stated that there 
were only three groups in the country which wished America to 
enter the war, namely the British, the Jews and the Roosevelt 
Administration. 

Stephenson decided to concentrate on America First, and 
for this purpose he naturally enlisted the support of existing 
anti-Nazi societies such as the Fight for Freedom Committee 
and the Century Group. The latter, which rendered excellent 
service in mobilizing influential American opinion in favour of 
the destroyers-for-bases agreement, and was wholeheartedly on 
the side of intervention, was led by a member of the Virginia 
state legislature and a former Rhodes Scholar, Colonel Francis 
P. Miller, who was also a close friend of Colonel Donovan. 
Meanwhile Stephenson despatched agents to attend America 
First meetings in different parts of the country and to keep 
track of new members. One agent befriended the woman in 
charge of the America First lecture bureau in New York and 
procured from her a mass of information about its propaganda 
themes, its financing and its backers, particularly its German 
backers such as Ulrich von Gienanth of the German Embassy 
and Gunther Hansen-Sturm. The latter had paid Congressman 
Hamilton Fish a cheque, of which Stephenson managed to 
obtain a copy and pass to the press where it was published. 
When Representative Fish made a speech at an American First 
Rally at Milwaukee, Stephenson persuaded certain Fight For 
Freedom members to attend as well. Just before Fish concluded 
his oration, one of them handed him a card on which was 
written, c Der Fuehrer thanks you for your loyalty'. At the same 
moment a photographer took a picture of the scene, and the 
picture with Hitler's message quoted in the caption made good 
copy for the newspapers. Stephenson also arranged for the 
meeting to be picketed outside the hall by the American 
Legion, while girls inside distributed Fight For Freedom 
literature. 

Only once did a plan for harassing America First miscarry. 
That was at Madison Square Garden in New York on October 
30, 1941^ when Lindbergh was to address what was hoped 



74 

would be a huge gathering. Stephenson had caused duplicate 
tickets for the meeting to be printed, and these were freely 
distributed to members of the various pro-British societies. 
The plan was for some of the holders of these spurious tickets- 
to go early and be in their seats before the genuine ticket- 
holders arrived, while others would arrive late and start trouble 
by demanding the accommodation to which their tickets 
ostensibly entitled them. Thus it seemed there was a good 
chance of disrupting the whole proceedings. But unluckily, for 
some unexplained reason, there was a very small audience that 
night, much smaller than the organizers had anticipated. The 
duplication of the tickets was soon noticed and the ushers 
merely showed the would-be trouble-makers into the numerous 
vacant seats. The result was that Lindbergh addressed a 
considerably larger audience than he would have done without 
Stephenson's benevolent assistance. 

While the campaign directed by Stephenson against America 
First throughout 1941 did not cause its disintegration, it did 
considerably reduce its usefulness to the Germans at a very 
critical period in Hitler's fortunes, and the way was paved for 
the great disrepute into which it shortly fell. Its last big meeting 
was addressed by a leading isolationist Senator on Sunday, 
December 7, 1941. Suddenly the chairman interrupted to say 
that the Japanese had attacked the American Fleet at Pearl 
Harbour. It's just what the British planned for us!' the Senator 
remarked without a moment's hesitation. A few days later the 
United States were in the war at Britain's side, and America 
First was no more than an ugly memory. 



3 

In April, 1940, the British Consul-General in San Francisco 
informed the British Embassy in Washington that he had been 
approached by an acquaintance of his German opposite 
number, who apparently wished to establish relations on a 
secret and confidential basis with some responsible representa 
tive of the British Government. Now the German Consul- 
General at this time was Captain Fritz Weidemann, who had 
been Hitler's superior officer when the Fuehrer was a corporal 
in the First War. For a time Weidemann had been close to 



75 

Hitler who had employed him first as a personal A.D.C. and 
then on a number of confidential missions as a special envoy, 
including one to London in the summer of 1938 when, unknown 
to Ribbentrop (who subsequently found out), he had tried 
without success to pave the way for a visit by Field- Marshal 
Goering. He was believed to have in some degree fallen from 
favour after Munich, an impression confirmed by his San 
Francisco appointment early in 1939, although the FJB.L 
considered it a possible cover for the direction of Nazi espionage 
on the West Coast and in Latin America. According to Weide 
mann's acquaintance, a British subject of doubtful reliability, 
Weidemann expected to be ordered back to Germany and was 
afraid to return because of his quarrel with Ribbentrop; he had 
hinted that perhaps he might be allowed instead to come to 
Britain where he could help in negotiating peace with a 
restored Hohenzollern monarchy after Hitler and the Nazi 
regime had been overthrown. 

Lord Lothian, who was then Ambassador, turned the matter 
over to Stephenson. Before taking any steps, Stephenson 
consulted the F.B.I., and he learned from Hoover that the 
Bureau had been monitoring Weidemann's telephone calls. In 
one recent conversation with the German Embassy, it appeared 
that the Embassy had adopted a domineering attitude 5 towards 
him, so that there seemed some grounds for believing that 
Weidemann's story might have some foundation in fact. As the 
result of further discussion between Stephenson and Hoover, it 
was agreed that contact should be made with Weidemann from 
the British side. For this purpose Stephenson invited the 
assistance of Sir William Wiseman. 

At this point a woman entered the story a clever, scheming 
Austrian who bore some resemblance to the glamorous spy of 
fiction. Born plain Steffi Richter, the daughter of a middle-class 
Viennese lawyer, she had married a Hungarian nobleman in 
London in 1914, divorcing him six years later but keeping Ms 
name and title, so that she continued to be styled Her Serene 
Highness Princess Stephanie Hohenlohe-Waldenberg-Schillings- 
furst. She moved freely about Europe between the wars, at one 
time living in the Schloss Leopoldskron across the valley from 
the Hitler villa in Berchtesgaden and at another in a flat in 
Mayfair, where she acted as hostess to Weidemann dpring his 



7 6 

visit to England in the summer of 1938. (Ribbentrop always 
said she was Weidemann's mistress.) She entertained lavishly, 
but nobody knew where her money came from until a lawsuit 
she brought against the British newspaper magnate, the late 
Lord Rothermere, revealed that she had been employed by him 
as a kind of public relations agent with the top Nazis and that 
some of the money at least came from him- The rest no doubt 
originated in Nazi funds. On the writing-table of her Mayfair 
flat stood a photograph of Hitler inscribed in his own hand to 
'My dear Princess', and presented to her with a letter in which 
the Fuehrer had conveyed his 'sincere thanks for the great under 
standing you have always shown for our people generally and 
for my work especially'. Forced to leave England shortly after 
the outbreak of war she was described in the House of 
Commons as 'a notorious member of the Hitler spy organiza 
tion' s he turned up shortly afterwards in New York where she 
announced that she had come 'to go shopping on Fifth Avenue'. 
However, it was observed that her old friend Fritz Weidemann 
had flown in from the West Coast to meet her, and the next that 
was heard of her was that she was staying as the guest of 
Weidemann and his wife at their house in San Francisco. 

Since Sir William Wiseman had known the Princess slightly 
in London, Stephenson suggested that Wiseman should see her 
first and that the contact with Weidemann could best be made 
through her, particularly as this might also throw some light on 
the Princess's own position. Accordingly, with the knowledge 
and approval of the F.B.I., Wiseman invited the Princess to 
meet him in San Francisco. The first of several such meetings 
took place in Room 1026 of the Mark Hopkins Hotel on 
November 26, 1940. They began by discussing the possibility 
of the Princess's going to Berlin to place a peace proposal 
before Hitler and Ribbentrop, for the Princess was confident 
that 'she could make Hitler realize he was butting his head 
against a stone wall and that at the opportune time he should 
align himself with England to achieve lasting peace'. Wiseman 
listened attentively and undertook to relay her proposition to 
the appropriate British quarters and ascertain whether her 
mission could not receive the unofficial blessing of the British 
Government. 

The following evening they were joined by Weidemann and 



77 

the conversation was resumed. But on this occasion the idea of 
negotiating with Hitler was pushed into the background and 
does not seem to have been seriously reconsidered. Instead, the 
trio discussed the possibility of re-establishing the monarchy in 
Germany with the support of the German army. Next day 
Wiseman returned to New York, and reports of the 'peace 
talks 5 duly reached both the White House and Downing 
Street. As might be guessed, nothing came of them, although 
Wiseman was asked to resume his conversations with Weide- 
mann, this time alone. 

During the next month or so, Wiseman had several long 
conversations with the German Consul-General in San 
Francisco; and, while the Englishman held out no promises, he 
encouraged the German to talk freely. The result was that 
Weidemann furnished a great deal of information about 
Germany, much of which was proved to be both accurate and 
valuable. He said that he himself had been opposed to the 
Nazi regime since the dismissal of General Von Fiitsch from 
the command of the army on a trumped-up homosexuality 
charge towards the end of 1938. He claimed to be in com 
munication with a number of high-ranking officers who felt 
that the only hope for Germany was a Hohenzollern restoration 
'because the monarchists did not share Hitler's aim of world 
conquest and wanted only the security of their country 5 . He 
suggested that the Crown Prince, whom Princess Hohenlohe 
called 'Little Willie', would be the right person to head an anti- 
Nazi revolution, although Weidemann doubted if he would 
become Kaiser. Weidemann gave the names of several of the 
high-ranking officers, including General Franz Haider (later 
arrested for suspected complicity in the bomb plot against 
Hitler's life in July, 1944), saying that they had conferred with 
the Crown Prince and that the latter, or one of his representa 
tives, would be glad to meet an accredited British representa 
tive in Switzerland to discuss their plans. 

In the course of these talks, Weidemann made some accurate 
prognostications concerning German strategy. Although he 
did not mention Hitler's intention to invade Russia, he did 
disclose that the Soviet Foreign Minister Molotov's recent 
visit to Berlin when he met Hitler had been a failure. In 
Weidemann's opinion, Molotov had been given instructions by 



78 

Stalin to discuss everything and agree to nothing. Furthermore, 
Weidem arm emphasized that 'Hitler had never liked or trusted 
the Russians and this fact should not be forgotten'. He also 
revealed that Hitler, who had expected Britain to be defeated 
by the beginning of October, 1940, was e now off balance for the 
first time', and that the persons chiefly responsible for mis 
leading him by confirming Ribbentrop's advice that 'England 
would not fight' were Lord Rothermere and Hitler's blonde 
English admirer. Unity Mitford, who had both reported in 1939 
that England was s on the verge of a Fascist revolution'. Weide- 
mann said that there had been a sound and detailed plan for 
invading England, drawn up by the Army Chief of Staff 
General Beck, but that it had been superseded by an impractical 
and amateurish plan which no one favoured except Hitler and 
Goering. When the General Staff told him that an attempted 
invasion of Britain by this means would be suicidal, Hitler had 
withdrawn into a state of deep gloom for three days. The latest 
plan for dealing with Britain, Weidemann continued, was to 
subjugate the country by heavy and persistent air raids,, for 
Hitler was convinced that 'Britain could not withstand 
prolonged bombing'. 

Perhaps Weidemann's most valuable piece of intelligence 
concerned future German strategy in the Balkans. In November, 
1940, he told Wiseman that the German High Command 
planned to close the Mediterranean at both ends by persuading 
Spain to collaborate and by inducing Bulgaria and Yugoslavia 
to join the Axis. 'From the point of view of logistics', Weide 
mann added, *a movement through the Balkans would not be 
so difficult as some people think. The problem has been very 
carefully studied. 3 As has already been seen, this was an 
absolutely accurate forecast of what happened five months 
later when Hitler's Panzer troops swept through Bulgaria to 
invade Yugoslavia and Greece. 

News of these conversations eventually reached the State 
Department, probably via the White House, and this caused 
the contact to be broken off, since it was feared that concerting 
plans for peace negotiations was an undesirable political 
activity, inconsistent with America's neutral status. Princess 
Stephanie was refused an extension of her residence permit and 
ordered by the U.S. Immigration authorities to leave the 



79 

country. (There was even a suggestion that Wiseman should 
also be deported, until it was explained that his participation 
in the conversations had been known all along and approved 
by the F.B.I.) After many tears and entreaties the Princess was 
allowed to remain after she had volunteered some 'interesting 
information'. But when America eventually entered the war, 
she was interned for the remainder of hostilities. As for Weide- 
mann, after the German Consular offices in the United States 
were closed, he was transferred to a similar post in Tientsin. 

Stephenson did not forget the services rendered to the Allied 
cause by Hitler's former commanding officer in the Sixteenth 
Bavarian Infantry Regiment. Alone of all the German consular 
representatives, who were obliged to leave the United States in 
1941, Captain Fritz Weidemann was provided with a safe con 
duct by the British authorities which enabled him to avoid 
Berlin and reach China by the comfortable and leisurely route 
he had chosen. 



A few days before Stephenson and Donovan arrived in Ber 
muda on their way to London in December, 1940, the British 
censorship examiners intercepted a typewritten letter addressed 
to Mr. Lothar Frederick, i Helgolaender Ufer, Berlin. It bore 
a New York postmark and the contents consisted of a list of 
allied shipping in New York harbour which had been observed 
by the writer, who gave details of their arrivals and departures 
together with particulars of their armament. The letter was 
signed e joe K', and although written in English, it contained 
certain expressions, such for example as the use of the word 
'cannon' for guns (German kannone), which suggested not only 
that the writer was German but that he was also a Nazi agent. 
This surmise was correct. Indeed the Berlin address turned out 
to be a cover address for Gestapo Chief Heinrich Himmler. 

At this time the present author happened to be the Security 
Officer attached by M.L6. to the British Censorship station in 
Bermuda. He showed the letter on his arrival to Stephenson, 
whom he had previously met while visiting New York on duty, 
and whose organization he was shortly afterwards to join; it 
was also shown to Donovan who happened to be present at the 



8o 

time. This might turn out to be a most important letter', said 
Stephenson when he had looked at it. The consensus of opinion 
was that it could lead to the revelation of widespread German 
espionage activities in the United States. 'Keep a look out for 
any more like it*, Stephenson added. The Security Officer 
promised to do so. 

The mail sorters were thereupon instructed how to recognize 
the mysterious Joe K's handwriting on the envelopes, ^and as 
a result a considerable number of letters from him to different 
addresses was picked out, mostly those to intermediaries in 
Spain and Portugal. The envelopes bore return addresses on the 
back to places in or near New York, which were fictitious, 
although it was noted that in each case the first name began 
with the letter J. This correspondence purported to be 
from an ordinary commercial agent dealing with various 
commodities, but most of it contained a secondary meaning 
which was not very difficult to determine. The following 
example was taken from a letter addressed to Manuel Alonso, 
Apartado 718, Madrid. 

Your order no. 5 is rather large and I with my limited 
facilities and funds shall never be able to fill such an immense 
order completely. But I have already many numbers in stock, 
and shall ship whatever and whenever I can. I hope you have 
no objections to part shipments. ... 

Please give me more details about the merchandise to which 
our customers have any objections. Since they are paying for 
it, they are entitled to ask for the best. From the paying 
customers I take anytime criticism and I should also appreciate 
your suggestions for improving the quality and delivery. 

In other words, a recent request for information called for a lot 
of work, which with the relatively small organization and little 
money at the writer's disposal it would take him some time to 
supply. Meanwhile he would send what he could and would 
like to know how exactly his reports have fallen short of what 
is required by Berlin. 

The censorship examiner who had been working on the 
secondary meaning in the Joe K correspondence was a very 
determined young lady named Nadya Gardner. She thought 
that the letters might contain secret writing in addition to the 
clear text, and she sent them to the censorship laboratory for 



8i 

chemical tests to be applied. The results were negative. Never 
theless Miss Gardner was not satisfied. Fortunately she herself 
possessed a slight knowledge of inorganic chemistry, and she 
suggested that the old-fashioned iodine reagent, which was 
much used by the Germans during the First World War, should 
be tried. After considerable persistence by Miss Gardner in the 
face of the doubts voiced by the experts, this test was eventually 
made. This time the results were astonishing, since the secret 
writing which was brought out in every letter tested was seen to 
contain the latest information on aircraft production and ship 
ping movements. Morever, it was established that the secret 
ink was a solution of pyramidon, a powdered substance often 
used as a headache cure and readily obtainable at any pharmacy 
or drug store. 

Early in March, 1941, a letter in German to one of the cover 
addresses in Portugal was intercepted. It contained elaborate 
details of aircraft supplied to Britain by the United States and 
also of the U.S. Army training programme. It was signed 
'Konrad' and was evidently the work of a trained military 
observer. This letter was also tested for secret writing which 
revealed that the writer's address was 'c/o Joe 5 , and also that 
he was posting duplicate reports via China and Japan. 'Konrad' 
added: 'If further information on Puerto Rico is desired (see 
my report sent through Smith, China), please send Joe a tele 
gram of good wishes.' 

At the same time Joe's letters indicated that he was in touch 
with Konrad, whom he sometimes called ThiP or 'Julio'. Mean 
while, thanks to the lead given by the Bermuda censors through 
Stephenson, the F.B.I, had intercepted a report from Konrad 
to Mr. Smith of China giving exact details of the defences of 
Hawaii, with maps and photographs, notably of Pearl Harbour. 
This will be of interest mostly to our yellow allies', the report 
concluded. Nevertheless the F.B.I. was still no nearer discover 
ing the identity of either Konrad or Joe. 

Again it was the Bermuda censorship that provided the vital 
clue. On March 25, 1941, a letter written by Joe five days 
previously to Manuel Alonso in Madrid contained a most im 
portant piece of news. While attempting to cross Broadway at 
Times Square, New York, on the evening of March 18, it 
appeared that Thif had been knocked down by a taxi and 



82 

struck by another car as he lay on the ground. He had been 
taken to hospital where he had died the next day without 
recovering consciousness. 

As his condition was according to information received by 
telephone very critical, and I myself could not do anything, 
I notified 'his 5 consulate (through an old friend) which acted 
at once but it was impossible to save his life the injuries were 
too serious. 

This letter also contained secret writing which gave further 
particulars of the accident including the number of the car 
which had caused the fatal injury, and the name of the hospital, 
St. Vincent's, to which he had been taken, also the text of 
several cables which Joe had sent immediately after the acci 
dent. This part of the letter also stated: The Consulate men 
tioned is the Spanish. 5 

The F.B.I, soon followed up this information, which had been 
immediately passed to them by Stephenson. In fact, Hoover's 
men were already working on the accident from a different 
angle and had easily traced the victim from the Spanish pass 
port he was carrying in the name of Julio Lopez Lido. They 
had been called in following the prompt action of the manager 
of the Hotel Taft, where Mr. Lido had been staying. After the 
accident Joe had managed to grab his brief-case but was 
worried about his luggage. The same evening he had tele 
phoned the hotel and said that Mr. Lido had met with an 
accident and asked that his luggage should be taken good care 
of. When the voice at the other end began to ask questions, Joe 
became uneasy and hung up without giving his name. It was 
this incident which had aroused the hotel manager's suspicions. 
In the hotel register Mr. Lido had stated that his nationality 
was Spanish and that he had come from Shanghai. This 
seemed innocent enough, but the manager thought the 
anonymous telephone call rather queer. Anyhow he notified 
the police, who in turn informed the Public Administrator, who 
took possession of the dead man's luggage and effects and 
later turned them over to the F.B J. Some letters were found 
among his effects addressed to him from a certain Carl Wilhelm 
Von der Osten from Denver, Colorado. This individual was 
already suspected by the F.B.I, of being a German agent. 



8 3 

Under interrogation he now admitted that the dead man was 
his brother. Captain Ulrich Von der Osten, who was attached 
to the German military intelligence, that is the Abwehr. But he 
could throw no light on any of his brother's acquaintances. 

In his letters Joe had often referred to his uncle Dave and 
aunt Loney, who had a shop which they intended to sell. 
Later he wrote that *Mr. H. sold his store*, and in the letter of 
March 20 giving the details of Ulrich Von der Osten's fatal 
accident, Joe stated: 

As mentioned in one of my cables my aunt sold her store 
recently, and so it is not advisable to send her any more mail, 
but my other friends and relatives are still in business. 

Among the effects of the dead Von der Osten the F.B.L found 
a telephone number which they traced to a shop in a New York 
suburb. They then discovered that its owner had recently 
bought it from a couple named Dave and Loni Harris. Further 
inquiries revealed that the couple had a nephew named Fred 
Ludwig who was living somewhere in New York. The next 
problem was to find him among the city's millions of inhabitants. 

It was Stephenson's organization which provided the missing 
link in the chain of investigation. London headquarters 
reported that in early March a German agent in Lisbon had 
telegraphed a code message to Touzie' in New York, and they 
asked for identification of Touzie*. The F.B.L were requested 
to help, but they replied that, since 10,000 cablegrams were 
filed every day in New York, identification was impossible. 
Stephenson then obtained the information from a contact in 
the cable company's office, which was that Touzie* was the 
code name for Fred Ludwig, who lived in a suburb of New 
York. The name and address were passed to the F.B.I., who 
replied two days later: 'Investigation has disclosed that Joe K 
is identical with one Fred Ludwig.* 

Further investigation revealed that the spy, whose full name 
was Kurt Frederick Ludwig and whose age was forty-eight, had 
been born in Fremont, Ohio, and taken to Germany as a child 
where he grew up, married and had a wife and three children 
living in Munich. He had visited the United States several 
times in the nineteen-twenties and thirties, and when he finally 
returned to organize a spy ring in March, 1940, he had entered 



the country on an American passport, posing as a salesman of 
leather goods. He had then proceeded to gather a number of 
willing helpers from among the members of the German- 
American Bund. It must have been love of his work which kept 
him at it, as he was certainly not overpaid, his remuneration 
consisting of sums ranging from $50 to 8500 which from time 
to time would be surreptitiously passed to him in an envelope 
by a member of the German Consulate in New York at some 
pre-arranged meeting place such as Child's Restaurant on 
34th Street. From the time of Von der Osten's arrival, Ludwig 
had been acting under his orders. 

Ludwig was not arrested immediately, as the F.B.I, wished 
to get on the trail of as many of his confederates as possible. 
Instead he was kept under careful surveillance, while his 
acquaintances were being investigated at the same time. 
Eventually he discovered that he was being watched. In June, 
1941, the F.B.I. uncovered another spy ring and made a 
number of arrests. This was effected through the co-operation 
of a 'double agent' named William Sebold, a naturalized 
American citizen of German birth who ostensibly ran a secret 
radio transmitting station for the Germans while really working 
for the F.B.I. who fed him with appropriate information. (The 
story of this operation, which was an exclusively American one, 
was later recorded in the film, The House on gmd Street.} Some 
of the agents arrested in this case were actually with Ludwig 
when they were picked up. Consequently he decided that it was 
time for him to get out of the country, and he left New York, 
driving his car west. He was followed and eventually appre 
hended in the state of Washington near Seattle, which he was 
making for in the hopes of catching a ship for Japan. When 
arrested, he was found to have several bottles of pyramidon in 
his possession. Asked by the F.B.I. why he had so many, he 
replied that he suffered from chronic headaches. But the 
headaches could not explain the contents of another small 
package in his possession namely a lotion eyebath and several 
toothpicks slightly brown at the ends where they had obviously 
been dipped in some solution. 

Other arrests quickly followed, among them a particularly 
Interesting agent named Paul Borchardt, a scholarly ex-officer 
of the German Army, who (as Stephenson was able to tell the 




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intercepted letter from the German spy e joe K' (Fred Ludwig), 

describing the car accident in which his superior officer. Captain 
Ulrich von der Osten was killed in New York. This letter, which also 
contained secret writing, provided the vital clue leading to the 

spy's arrest 

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85 

F.B.I.) had taught young Nazi officers the science of 'geopolitics' 
under the direction of the celebrated Professor Haushofer in 
Munich, and had later spent a year in Britain apparently as a 
refugee, since he was of Jewish extraction. His job was to assess 

the military value of the information which Ludwig and the 
others collected. Some of the documents incriminating 

Borchardt had been obtained through the initiative of an 
American employee of the German Consulate in New York, 

who was in charge of the furnace and had managed to retrieve 
them largely intact by throwing them into the furnace in such 
a way that they choked off the draught. 

Ludwig and eight of his confederates were tried in the United 
States District Court in Brooklyn, New York, and convicted. 
(The documentary evidence put in by the prosecution con 
sisted of three hundred exhibits.) Much of the evidence which 
secured their conviction was supplied by the testimony of two 
British witnesses, Mr. Charles Watkins-Mence, the CMef 
Censor at Bermuda, and his indefatigable assistant Miss Nadya 
Gardner, who identified the more important examples of 
Ludwig's correspondence, which were produced in Court. 
Commenting on their evidence at the time, the New Tork 
Herald-Tribune drew attention to the fact that this co-operation 
between British and American officials was the first such 
instance publicly recorded in the period immediately before and 
during the present war. 'Although the Federal Bureau of 
Investigation did not really get on the trail of the alleged spies 
until one of them was accidentally killed by a taxi in Times 
Square last March 5 , the Herald-Tribune continued, 6 the letters 
turned over by the British dovetailed neatly with what the 
F.B.I. uncovered here.* 1 

On March 13, 1942, Judge Henry W. Goddard, who had 
tried the case, imposed "sentences varying from twenty years 
imprisonment, in the case of Ludwig, Borchardt and another 
of the defendants Rene Froelich who had passed over to 
Ludwig important military intelligence from Governor's 
Island, New York, where he was stationed to five years in the 
case of Ludwig's secretary, an eighteen-year-old blonde 
named Lucy Boehmler, who pleaded guilty and was the 
principal witness for the prosecution. All the defendants were 

1 Jfew York Herald-Tribune, February 18, 1942, 
.c. 4 



86 

released after the war and in the circumstances were fortunate, 
since, of course, had their acts of espionage occurred after 
instead of before Pearl Harbour, most of them would have gone 
to the electric chair. 

Immediately after the trial, Mr. Mathias Correa, the District 
Attorney, who had led the prosecution, wrote to the liaison 
officer in Stephenson's organization whose duty it had been to 
assemble the evidence from the British side and produce the key 
witnesses from Bermuda in court. 

Department of Justice, 
United States Attorney, 
Southern District of 

New York, 
New York, N.Y. 
March 16, 1942. 

Captain H. Montgomery Hyde, 

British Security Co-ordination, 

Room 3603, 

630, Fifth Avenue, 

New York, N.Y. 

DEAR CAPTAIN HYDE, 

Now that the Ludwig case is finally and successfully con 
cluded, I wish to take this opportunity of expressing to you 
my appreciation of the most friendly and helpful co-operation 
and assistance which you and your associates rendered us in 
that case. 

In my opinion the testimony and exhibits furnished by Mr. 
Watkins-Mence and the other members of the Imperial Censor 
ship stationed at Bermuda contributed very largely, in the case 
of some of the defendants almost wholly, to the successful 
outcome of the case. 

Finally, I wish to thank you for the friendly spirit of co 
operation in which you helped us at all stages of the case with 
which you were concerned. I look forward to a continuance 
of that pleasant relationship, however our official paths may 
cross. 

With kindest personal regards, 
Sincerely, 

MATHIAS F. CORREA, 
United States Attorney. 

Thus ended the first case of espionage to be tried in the 
United States after that country had entered the war. For 



87 

reasons of policy the part played by the two British agencies, 
Stephenson's B.S.C. and the Bermuda censorship, was deliber 
ately played down. It is well that the record should now be 
put straight. 



Members of the United States Congress (unlike British Members 
of Parliament) have long enjoyed the privilege of sending 
letters through the mails without paying for the postage, 
using envelopes which are 'franked' with the signature of the 
sender. This privilege is constantly and quite legally used by 
Senators and Representatives to distribute to their constituents 
copies of their own speeches, poems, or anything else which in 
their opinion their constituents should read. It is, however, 
illegal to employ the Congressional Trank' for the benefit of 
clubs or societies. Early in 1941, a friend of Stephenson, who 
was in the advertising business, drew his attention to the fact 
that certain isolationist Congressmen were using the Trank' for 
distributing free through the mails not only their own isolationist 
speeches but others which had been specially written by Nazi 
propagandists. Moreover this material was being sent to people 
throughout the United States regardless of where they lived. It 
almost seemed as if Congress was being converted by some 
sinister means into a distributing house for German propaganda. 
A little inquiry by Stephenson disclosed that the material 
was going to all persons on the mailing list of the German 
Library of Information in New York. This fact was checked by 
one of Stephenson's staff who was able to arrange for certain 
names and addresses to be inserted into the Library's list. Very 
soon the same names began to appear on 'franked* isolationist 
mail from United States Congressmen. It was remarked that 
this mail was not confined to New York, but also originated in 
Washington and elsewhere. Next the envelopes were compared, 
and it was found that, while the Tranked' envelopes emanated 
from different Senators and Representatives, they were all 
addressed in the same hand. For instance, in one monty. an 
American of German descent in New York received 'franked' 
mail from five different Congressmen, although these isolationist 
Congressmen represented widely separated states. This 



88 

obviously suggested that there was one single centre of 
distribution. 

Examination of a certain Senator's 'franked 5 envelopes 
posted in New York revealed that the names and addresses 
were stencilled in a peculiar blue ink by a distinctive type of 
addressing machine. Further investigation showed that the 
machine was an out-of-date Elliott, of which there were only 
three specimens in New York, and that it belonged to a German 
'cultural' organization called the Steuben Society, which had 
an office in Lexington Avenue. Samples of the Steuben Society's 
literature were then procured and found to have been stencilled 
on a similar machine in the same peculiar blue ink and in the 
same distinctive style. Furthermore, the address plate bore the 
same code number as the one used for the Senator's envelopes. 
The literature sampled urged members of the society to attend 
certain meetings at which reprints of the Senator's speeches 
would be available in 'franked' envelopes for mailing to their 
friends. 

In May, 1941, Stephenson began his counter-offensive. His 
friend in the advertising business published an open letter to 
the Senator, accusing him of misusing the privilege of the 
Congressional 'frank', and supported his charge with choice 
quotations from the evidence which Stephenson had collected. 
This open letter, of which 100,000 copies were reprinted and 
widely distributed throughout the country, was sensational in 
its public effect. The Senator raised a somewhat feeble protest 
in the Senate, in the course of which he admitted that the 
America First organization had purchased a million of his 
Tranked' postcards. The immediate result was that the Steuben 
Society was fined for violation of the postal regulations, while 
the Senator lost considerable prestige. 

Although the German Consulates and other official German 
agencies in the United States were closed shortly afterwards by 
Presidential executive order, the abuse of the Congressional 
'frank' continued. Indeed the volume of Nazi propaganda 
distributed through this medium seemed if anything to increase. 
Stephenson now shifted his inquiries to Washington, where 
they eventually led to the office of Representative Hamilton 
Fish on Capitol Hill. Fish, a fifty-one-year-old lawyer and 
Harvard graduate from New York, was an extreme Republican 



89 

Isolationist. But, in spite of his pro-German sympathies, he does 
not appear to have been guilty of any crime under American 
law. It was his clerk, an insignificant bureaucrat named George 
Hill, who was the real villain behind the scenes. 

Hill, who was also the local commander of the Order of the 
Purple Heart, the American wounded war veterans' organiza 
tion, used his position to get isolationist and pro-German 
propaganda inserted in the Congressional Record. It was not 
necessary for this material to be read out on the floor of the 
Chamber. Any Congressman had merely to rise in the House 
or Senate and obtain formal permission for a document of 
virtually any length to be incorporated in the official proceed 
ings, and he would then hand it to the Government Printer. 
Fish could usually be relied upon to oblige in this respect. 
Other Congressmen were persuaded to sign an order to the 
Government Printer for so many reprints in the belief that they 
were helping the Order of the Purple Heart. Hill paid the 
government price for the printing, which was about one third of 
the normal retail price. He would then sell the reprints with 
appropriate Tranked 3 envelopes to America First and isolationist 
organizations at the retail price, pocketing the difference for 
himself. 

One of these other organizations, the Make Europe Pay War 
Debts Committee, was run by a friend of Hill called Prescott 
Dennett. One day Dennett received a subpoena to attend before 
a Grand Jury, which was investigating the distribution of 
German propaganda, in terms which suggested that he was 
known to have been misusing the Congressional 'frank*. 
Dennett took fright and in a panic telephoned Hill asking him 
to remove the bags of Tranked 5 mail which Hill had given him 
to despatch. Hill ordered a government truck to collect the bags 
and deliver them to a storeroom in the Congress building used 
by Hamilton Fish. The lorry duly collected the bags, but by< 
mistake delivered them to Fish's office. Fish's girl secretary, 
who was somewhat taken aback by this unwelcome consign 
ment, kept a few of the bags in the office; the remainder, about 
a dozen, she sent over to the office of America First, a move 
which was observed by one of Stephenson's agents who had 
been keeping watch. Stephenson lost no time in informing 
Hoover, and suggested that the America First office should be 



9 

raided by the Federal authorities. The raid took place, and the 

bags were found. 

Called before the Federal Grand Jury investigating German 
propaganda activities. Hill swore that he had not given orders 
to hide the mail bags. He also denied that he knew the ace 
German propagandist George Viereck. He was promptly 
indicted on a charge of perjury and duly convicted. (It was 
proved that his employer. Representative Fish, had introduced 
him to Viereck.) He was sentenced to a term of from two to six 
years' imprisonment. Hamilton Fish, after unsuccessfully 
attempting to get the House of Representatives to grant him 
immunity from testifying, only escaped the ordeal of question 
ing by hurriedly rejoining the army. But he had to take the 
stand at Viereck's trial (1 have been in Congress for twenty- 
two years and not a piece of Nazi propaganda has gone out of 
my office with my knowledge or consent.') 

Hill's paymaster Viereck, who later admitted that between 
September, 1939, and America's entry into the war he had 
received over $100,000 from German sources for his propa 
ganda activities, was arrested in October, 1941, and charged 
with failure to comply with the Foreign Agents Registration 
Act. Described at the time of his arrest by a Government spokes 
man as 'the top-ranking German propagandist in the world 
and a menace to security', George Sylvester Viereck, who was 
a naturalized American citizen, had been known as a pro- 
German publicist since before the First War. His father Louis 
Viereck, a former Socialist member of the Reichstag, was said 
to have been the illegitimate son of the German Emperor 
William I by an actress, and George himself was always a fer 
vent admirer of the Kohenzollern dynasty. Among the counts 
in his indictment was one charging him with having arranged 
for the wholesale distribution of speeches attacking the Admini 
stration's foreign policy under the Congressional Trank' with 
the collaboration of George Hill. 

In the course of Viereck's trial, which opened in the Federal 
District Court in Washington on February 4, 1942, Mr. 
William Maloney of the Attorney-General's office, who was in 
charge of the prosecution, learned from the FJB.I. that a letter 
had been intercepted by the Bermuda censors from Viereck to 
Dr. Hans Heinrich Dieckhoff, former German Ambassador to 



9* 

the United States and at that time Chief of the Foreign Propa 
ganda Division of the German Foreign Office. This letter con 
tained proofs of a book entitled Who's Who Among the War 
Mongers by Senator Rush Holt with corrections in Viereck's 
handwriting. By a fortunate coincidence the examiner who had 
dealt with this letter was Miss Nadya Gardner, who was actually 
in New York at the time giving evidence in the Ludwig spy 
trial. Stephenson immediately arranged for the letter to be 
made available and for Miss Gardner to attend the court to 
prove it in evidence. As a surprise witness in the case, her 
testimony caused a considerable sensation, since it was the only 
evidence that the prosecution was able to establish as proof of 
Viereck's connection with the Propaganda Division of the 
German Foreign Office. It was also conclusive proof of his 
guilt. He was convicted on three of the five counts on which he 
was charged. e l am passionately devoted to the United States 
and all that she stands for, and she is the only country to which 
I owe allegiance', he declared indignantly. 1 deplore the cruel 
war that has come between the land of my birth and the land 
of my choice.' He added that he had one son in the United 
States Army and another about to enlist. But this declaration 
did not save him from a sentence of from two to six years' im 
prisonment and a fine of $1,500. 

The Supreme Court, to which Viereck's lawyers successfully 
carried his appeal, set aside the verdict of the lower court and 
ordered a new trial on the ground that the jury had been 
misdirected by the trial judge and that Viereck had been called 
upon to supply more information than was required by the 
statute, since he was not obliged to disclose propaganda 
activities carried out on his own account. Chief Justice Stone 
also described some of Prosecutor Maloney's remarks to the 
jury as c highly prejudicial' to the course of justice. Consequently 
at the new trial, which began on June 25, 1943, Mr. George A. 
McNulty, Special Assistant to the Attorney-General, appeared 
in charge of the prosecution, and undertook to establish that all 
the acts proved in the first trial had been committed by Viereck 
as an agent of the German Government and not merely for 
himself. 

Miss Gardner of the Bermuda censorship again took the 
witness stand and testified that she had intercepted a weekly 



92 

news-letter from Viereck to Dieckhoff, which frequently went 
through a Lisbon intermediary, Hoynigero Hueneras, an alias 
for Baron von Hoyningen-Huene, former German Ambassador 
to Portugal. George Hill was brought into court from prison to 
give evidence which earned him a remission of his sentence 
he described how he had mailed speeches written by Viereck 
under Congressional Trank' and that the expenses had been 
paid partly by Viereck and partly by Prescott Dennett. Finally, 
Dr. Paul Schwarz, a former German Consul in New York, 
related how Viereck had been engaged by the Consulate as a 
public relations adviser and had agreed to influence American 
public opinion in his writings. Incidentally, Viereck's cash 
book, which the prosecution produced, showed that for the first 
six months of 1941 he had received $32,000 from the German 
Library of Information, although his agreement with that 
organization only provided for $500 a month. 

Viereck was again convicted, and this time the sentence was 
one to five years. In fact, he served four-and-a-half years in 
various federal penitentiaries and was released shortly after the 
end of the war. He went back to propaganda, choosing the 
safer but equally congenial theme of the seamier side of American 
prison life which he dealt with no less effectively. 'You seem to 
have stood it with extraordinary spirit', Bernard Shaw wrote 
to him on his release. 'Most martyrs are duds.' 1 

When the trial was over, Stephenson's liaison officer with 
the Department of Justice the same one who had helped the 
federal authorities with the Ludwig spy case was invited to 
visit the Department's headquarters in Washington where he 
was personally thanked by the Attorney-General, Mr. Francis 
Biddle. The chief prosecutor in charge of the case likewise sent 
him an official letter of thanks. *I want to express our thanks 
and the thanks of the Department to you and the British 
Security Co-ordination for the assistance which you have ren 
dered in the Viereck case', wrote Mr. George McNulty. C I am 
sure that you must be gratified that the material intercepted by 
the British Censorship has been put to such effective use. Miss 
Gardner deserves great credit both for the quality of her work 
and her shrewdness as a witness.' 

Justice also caught up with Congressman Hamilton Fish. 

1 G. S. Viereck. Men into Beasts (1952), at p. 8. 



93 

The details of the malpractices of his clerk Hill and his friend 
Viereck, not forgetting their abuse of the Congressional Trank' 
in his office 3 were suitably recorded in print and the result 
distributed by Fish's opponents to the voters of the 26th New 
York District before the elections of November, 1944, at which 
he was a candidate. Hamilton Fish was not re-elected. 



CHAPTER IV 



THE VICHY FRENCH 
AND OTHERS 



No action of President Roosevelt in the diplomatic field 
divided American public opinion so sharply, or was more 
severely criticized at the time, as his decision to maintain 
relations with the Government of Unoccupied France which 
had been established on an avowedly authoritarian basis at 
Vichy with the aged Marshal Petain as Chief of State. The 
Canadian Premier Mackenzie King was similarly under fire in 
his country for keeping a representative at Vichy. Judged in the 
light of subsequent events, there can be no doubt now that the 
action of these two statesmen was fully justified, since, as Mr. 
Churchill later put it, 'here at least was a window upon a court 
yard to which we had no other access 5 . 1 Nevertheless it was 
widely misunderstood in many quarters, particularly where 
there was sympathy with General de Gaulle and his Free 
French Committee who were carrying on the struggle against 
the Nazi victor overseas. The feeling was intensified when it was 
seen that behind the degrading Fascist fagade of Vichy lurked 
the sinister figure of Vice-Premier Pierre Laval, the arch-col 
laborationist and Petain's designated successor, who arranged 
the meeting between the Marshal and Hitler at Montoire and 
openly prayed for Britain's defeat. 

In September, 1940, Gaston Henry-Haye, the Vichy Govern 
ment's first Ambassador, arrived in Washington to take up his 
appointment. When Henry-Haye called to pay his respects at 
the State Department, Cordell Hull received him coolly, since 
the Secretary of State knew that this little man with the ruddy 
cheeks and the truculent moustache bore the taint of association 
with Laval and his group. The Ambassador's first effort with 
1 Churchill. II, 450. 

94 



95 

Hull was to try to exonerate himself from the recently published 
charges that he was anti-British and pro-German. c lt is due to 
you to know 5 , Hull commented tartly, 'that your Government 
is anti-British and pro-German when it goes beyond the spirit 
of the letter of the armistice agreement.' The Secretary of State 
had in mind Hitler's designs on the French fleet, and he was not 
in the least deceived by the Ambassador's assurances that all 
plans had been made to send the fleet away or scuttle it if the 
Germans attempted to gain possession of it. 1 

Although the Vichy Ambassador attempted to dissemble in 
front of Secretary Hull, he made himself perfectly clear when he 
called together the staff of the Embassy and addressed them on 
their duties. 'Our prime objective is to establish the fact that 
Britain betrayed France and is therefore her real enemy', he 
said. 'Every means at our disposal must be used to convince 
American officialdom and the American public that this is true. 9 
(Stephenson learned of this speech, which was of course con 
fidential, from a contact he had established inside the Embassy.) 
At this time there were many influential Americans who had 
social connections or investments or both in France and who 
were inclined to support Marshal Petain. They and their 
French friends felt bitterly towards the British for refusing to 
send any more planes in the last days of the fighting, and they 
felt still more anti-British by reason of the attack on the French 
fleet at Mers-el-Kebir and Oran, which had resulted in the 
disabling of several naval vessels as well as in considerable loss 
of life. Henry-Haye exploited these feelings assiduously. At the 
same time he organized a kind of Gestapo in the Embassy to 
report upon the activities of supporters of the former French 
Government and in particular those who had responded to 
General de Gaulle's patriotic call. Every means was employed 
to prevent them joining the Free French movement, their 
families in France were threatened with reprisals, and their 
names were sent to Vichy where they were published in a decree 
depriving them of their citizenship. 

A report received by Stephenson indicated this Gestapo 
was first directed by Count Ren6 de Chambrun, whose 
wife Jos6 was a daughter of the infamous Laval. Towards the 
end of 1 940, Jos6 de Chambrun returned to France by Clipper. 

1 Hull. I, 847-8. 



96 

The British Embassy at Washington issued instructions not to 
detain her at Bermuda where the aircraft was due to call, since 
she was travelling on a diplomatic passport which Britain, not 
being at war with the Vichy Government, was bound to 
respect. Her safe-conduct also covered any documents she 
might be carrying provided that they were destined for 
Unoccupied France. On being asked by the passenger control 
at Bermuda to produce any letters in her possession, she 
exhibited several sealed envelopes which were examined and 
found to be addressed to the Minister of Foreign Affairs in 
Paris. Of course, this was intended for Vichy, but they were old 
printed envelopes from the Embassy stock in Washington and 
in preparing them the clerks in Henry-Haye's office had not (as 
they should have done) crossed out the word Paris and substi 
tuted Vichy. On this pretext the Security Officer, who was the 
present writer, relieved the Countess of the envelopes, having 
informed her that His Majesty's Government did not recognize 
any Government in Paris and regarded any address there as 
being in enemy occupation. The enraged Countess protested in 
vain. Later the contents of her packages were examined and 
seen to contain several letters actually destined for Paris, 
including one to Hitler's personal representative Otto Abetz. 
This latter letter was from an employee of the Embassy in 
Washington named Jean-Louis Musa, who was a personal 
confidant of the Ambassador's, and handled all covert propa 
ganda on behalf of the Vichy authorities in America. Musa also 
headed the Embassy Gestapo, and not Count de Chambrun, 
whose patriotic record was vindicated by the French judicial 

authorities after the war. 

Interesting facts of which Stephenson had knowledge con 
cerned another seizure at Bermuda at about the same time, in 
which the Vichy Government was implicated. In October, 
1940, the famous Vollard collection of impressionist paintings 
worth hundreds of thousands of dollars was consigned by the 
Vichy authorities to a French art expert in New York named 
Martin Fabiani. There was reason to believe that Fabiani was 
acting on German instructions and intended to sell the collec 
tion to secure dollar exchange for Hitler. The consignment, 
which consisted of 270 paintings and drawings by Renoir, 
thirty paintings by Cezanne, twelve by Gauguin, seven by 



97 

Degas and also some by Manet, Monet and Picasso, had been 
in various Paris museums, whence the British Ministry of 
Economic Warfare feared that they had been abstracted. 1 

The pictures were shipped from Lisbon for New York in the 
American Export Lines' Excalibur, which was brought into 
Bermuda by the British Contraband Control. Meanwhile 
instructions had been received from London to remove 
the contraband cargo. It fell to the writer of these pages to 
carry out this operation in defiance of the vessel's master who 
refused to open the strong-room where the precious packing 
cases reposed. This was eventually accomplished by blasting a 
way in with oxy-acetylene flame burners, and the pictures 
were removed. So as to avoid the effects of the Bermuda 
climate, they were sent to Ottawa, where they were kept for 
the duration of the war in the Canadian National Gallery, 
having in the meantime been condemned as prize. 

It was the successful execution of this operation which drew 
the present writer to Stephenson's attention, thus beginning a 
stimulating association of which this book has been the eventual 

outcome. 

2 

As a first step towards exposing the under-cover activities of the 
Vichy Embassy, Stephenson instituted some inquiries about 
the Ambassador's henchman Jean Musa. He discovered that 
Musa, although he had been born in Switzerland of a French 
mother by an Italian father, had been a United States citizen 
for more than twenty years he had once worked as a waiter 
in the Hotel Lafayette in New York where he was called 
'Nino', a nickname by which he was still known in the Vichy 
Embassy. In the earlier part of 1940 he had returned from 
France to New York, hoping to negotiate contracts for the sale 
of armaments for the French Government on a commission 
basis. The armistice suddenly put an end to this business, at the 
same time leaving him extremely short of cash. He was delighted 
when he heard that Henry-Haye was coming as Ambassador, 
since they had had business dealings together in the past, and so 
he got into touch with him as soon as he arrived. In the result 
Musa became Henry-Haye's personal secretary and homme 

1 The collection was formed by Ambrose Vollard. See Ills Recollections of a 
Picture Dealer (1936). 



d'affaires. A tall, swarthy man in his early fifties with dark fluid 
eyes and a fondness for bow ties, Musa soon made himself ex 
tremely useful to the Ambassador and to the Embassy generally. 
As Henry-Haye himself said, he was exactly right for the job. 

At the outset Musa was paid a salary of 8300 a month, with 
an additional $200 as expenses, a sum quite inadequate for a 
man of his extravagant tastes, especially when his wife and 
children joined him. Indeed, he confided to one of Stephenson's 
agents, who had deliberately cultivated his acquaintance, that 
the Ambassador paid him 'a perfectly ridiculous sum'. As 
cover for the operation which he planned, the agent took 
offices in New York where he ostensibly ran a trading company. 
He now suggested to Musa that they should go into business 
together and he offered to put an office and a secretary at 
Musa's disposal. Musa accepted readily and at once settled 
down in his new office, where Stephenson had microphones 
conveniently installed. In the result all Musa's conversations, 
whether on the telephone or otherwise, were recorded, his 
papers were examined daily and where necessary discreetly 
photographed; and the contents of his safe were regularly 
inspected, since Musa's 'business partner' had no difficulty in 
learning the combination. In fact there was little that went on 
in Musa's business and private life that Stephenson did not 
immediately know. He knew, for instance, all the details of 
Musa's plan to buy the controlling interest in a company 
which had the exclusive rights to manufacture the Bren gun in 
the U.S.A. Musa succeeded in interesting the French motor 
manufacturer, Emil Mathis, to whom he posed as a supporter 
of General de Gaulle, in the project; but, when at last it seemed 
likely to mature, and that Musa might obtain blueprints of the 
weapon, Stephenson informed Purvis of the British Purchasing 
Commission, who stepped in and stopped the deal. 

A more ambitious scheme, and a more dangerous one had it 
materialized, was the Vichy Government's plan to erect, in 
conjunction with the Western Union Cable Company, a 
powerful wireless station in the French island of St. Pierre, 
situated off the south coast of Newfoundland. Western Union 
had five cables running into St. Pierre from its 34,000 offices in 
the United States, and the proposed new station which the 
company envisaged building on land provided by the French 



99 

colonial government would be capable of communicating with 
anywhere in the world by radio-telegraph, while at the same 
time avoiding all the British censorship controls. For this 
privilege Western Union were to pay the Vichy Government a 
fixed royalty. 'I hope that you will give the necessary instruc 
tions', Musa wrote from his New York office to the Ambassador 
in Washington, 'so that this project of the greatest interest takes 
shape and progresses as fast as possible.' 

Fortunately Stephenson was in touch with one of the directors 
of Western Union, Vincent Astor, head of the Astor family in 
America and a confidential adviser of President Roosevelt; in 
fact Astor had recently been appointed to act as special liaison 
between the White House and Stephenson. Astor was not aware 
of the details of the scheme, but as soon as Stephenson had put 
him in possession of the relevant facts he brought up the matter 
at a company board meeting, outlining the dangers from the 
point of view of the British war effort. Knowing the confidential 
relationship in which he stood to the President, Astor's col 
leagues on the Western Union board assumed he had the 
President's backing for his statement. Anyhow it was decided to 
drop the whole business, and Western Union's European general 
manager, Maurice Cartoux, who had been working on the 
negotiations from the company's side, was consequently 
instructed 'in view of certain circumstances which have arisen 
concerning our proposed arrangements at St. Pierre' to 'discon 
tinue all your activities in this connection'. 

The watch which was kept on Musa's office revealed many 
other characteristic activities. For instance, he assisted the 
Embassy Military Attache, Colonel Georges Bertrand-Vigne, 
in evading both the American freezing regulations and the 
British blockade by paying dollars on the Colonel's behalf to 
Louis Arpels, the New York jeweller, while Arpels's company 
paid the equivalent in francs to the order of Bertrand-Vigne in 
France. He likewise conducted a regular business in remitting 
money to a Portuguese intermediary in Lisbon for the purchase 
of food parcels for transmission to the German Occupied Zone 
of France. He dabbled in the passport racket and some of the 
visas he obtained were for known German agents. He also sold 
exit permits from Unoccupied France for considerable sums, and 
on one occasion he endeavoured to work out a scheme whereby 



100 

French vessels would carry Spanish refugees to Mexico and 
would return to Marseilles fully laden with cargo, incidentally 
earning $150,000 for himself from each voyage. (Needless to 
say this scheme did not come off.) He collected information 
from French girls, former employees of the French Purchasing 
Commission, whom he had placed in various French and 
American business firms. And he succeeded in persuading a 
French language newspaper in Montreal not to engage Pierre 
Lazareff, the French journalist and editor, whom he suspected 
of supporting de Gaulle. 

Stephenson arranged that a comprehensive report should be 
prepared of Vichy French activities in the United States, 
including transcripts of Musa's telephone conversations and 
photostat copies of his letters and other documents. The report 
was given to President Roosevelt who read it as e a bed-time 
story', describing it as 'the most fascinating reading I have had 
for a long time 5 and 'the best piece of comprehensive intelligence 
work I have come across since the last war 5 . Stephenson there 
upon asked the President's permission to publish a suitably 
edited version in the American press. The President agreed, 
provided that the State Department had no objection. In the 
event the State Department proved amenable, but emphasized 
that the operation of discrediting Vichy policy in the United 
States must not be such as to cause a break in diplomatic 
relations between the two Governments. While Under-Secre- 
tary Sumner Welles had some reservations, Secretary of State 
Cordell Hull, who regarded Henry-Haye as a most contempt 
ible Ambassador, let it be known that he hoped Stephenson 
would go ahead and 'blow Vichy sky high'. 

3 

On August 31, 1941, which was a Sunday, the New Tork Herald- 
Tribune came out with the following headlines in large type 
splashed across three columns of the front page: 

VICHY EMBASSY IN U.S. 

SHOWN AS HEADING CLIQUE 

OF AGENTS AIDING NAZIS 

Underneath there were smaller captions such as 'Jean Musa, 
Ex-Waiter, Called Chief Aid in N.Y. in "Information 35 Work 5 



IOI 



and 'Henry-Hay e Cited As Guiding Hand'. The story which 
followed bore a Washington date line and had been written by 
one of the Tribune's reporters, Ansel E. Talbert, who had been 
supplied with carefully selected extracts from the anti- Vichy 
material collected by Stephenson's agents. It bluntly accused 
the Vichy Embassy of operating a secret intelligence organiza 
tion inside the United States with funds blocked by the U.S. 
Government with the object of assisting the Nazis to make 
France a vassal state of Germany. The three men in charge of 
this underground work under the general direction of the 
Ambassador were stated to be Colonel Bertrand-Vigne, the 
Military Attache, Captain Charles Brousse, the former Press 
Attache, and Jean Musa. An accompanying photograph 
showed the Ambassador walking with Musa and Bertrand- 
Vigne in the garden of the Embassy. 

Besides the Gestapo activities already described, the story 
gave an interesting example of intelligence in the broader 
military field. It revealed how the Vichy authorities were able 
to thwart General de Gaulle's plans to capture Dakar in the 
previous year. Apparently the plans for the ill-fated Free French 
expedition to the west coast of Africa were smuggled into the 
United States for the transmission to Vichy in the fuel tank of a 
motor car which was shipped from London to Hoboken on 
board the Greek steamer Nea Hellas. Also in the tank were lists 
of French army and naval officers and air force pilots who had 
joined the Free French movement. 

During the same week three more articles appeared with 
similar headlines such as VICHY AGENTS SOUGHT 
PLANS OF BREN GUN with the sub-heading: Tried to 
Get Blueprints of Weapon Defending Britain From Invasion. 5 
All the articles were reproduced in over one hundred news 
papers in the United States and Canada, including the Washing 
ton Post, the Baltimore Sun and the New Tork Daily Mirror. Mr. 
Henry Morgenthau, the Secretary of the Treasury, voiced the 
general acclaim when he expressed a desire to meet the Herald- 
Tribune reporter who had produced such a brilliant series of 
articles. He said he wished to compliment him personally on 
such an outstanding journalistic feat. 1 

It was, of course, a tremendous scoop for the Her aid-Tribune , 

1 New Tork Herald-Tribune, August 31, September 2, 3, 4, 1941. 



102 

since the articles were widely discussed throughout the country 
and provided the substance of numerous newspaper editorials. 
Henry-Haye reacted by summoning a press conference and 
stating that he was going to protest to Secretary of State Hull. 
'As a matter of fact I am very sad', he told the newsmen. It 
will be just one year tomorrow that I left France to come to your 
country to represent a defeated nation but still a very proud 
nation. The sacrifices we have made are greater than anyone 
else. And still here I am being obliged to give you an explana 
tion of a campaign which is in no sense justified. What is the aim 
of this campaign? The aim is to try to realize the ambition of 
certain Americans and certain Frenchmen to break up or 
deteriorate diplomatic relations between the French govern 
ment and the United States. I say the French government 
because there is no other French government than the one I 
represent.' The Ambassador then held up a copy of the Herald- 
Tribune of two days previously, adding as he did so, 'I saw the 
proof in the editorial of the paper which is just giving such a 
large hospitality to their wonder stories', 

Stephenson arranged that a pro-British reporter should 
attend this press conference and had him primed with em 
barrassing questions to put to the Ambassador. This resulted 
in more unfavourable publicity for the Vichy representative 
and his staff, since Henry-Haye's feeble and evasive explana 
tions were completely unconvincing. The Ambassador speaks 
as a representative of the French people, a friendly power', 
wrote the Herald-Tribune in a further editorial; 'yet the govern 
ment he represents has repeatedly done everything it could to 
promote the German victory, which the United States has 
declared to be profoundly inimical to its vital interest, and to 
embarrass the British resistance to which the United States is 
pledged to render every aid in its power,' 

The effect of this concerted newspaper campaign was 
altogether to discredit the Vichy regime's representation in the 
United States*. The Free French were naturally jubilant. Not 
the least satisfactory result was that the Musa's Gestapo largely 
ceased its activities, although Musa himself was kept on by the 
Ambassador at a small salary. As for Henry-Haye, he made no 
further public attempt to explain away the attacks upon him 
self and his staff and declined to answer any more questions on 



IDS 

the painful subject. But In private he was reported by a source 
of Stephenson's inside the Embassy to be 'not a little annoyed*. 
Indeed in a particularly violent outburst he described the whole 
affair as e de GaulHst-Jewish-British-F.B.L intrigue'. But he 
never really suspected the British at any time. Nor for that 
matter did S.I.S. headquarters in London. Some weeks after 
the articles had appeared, Stephenson received a communica 
tion from his London office to the effect that they expected he 
had seen reference in the New York Herald-Tribune to the 
exposure of Vichy French activities in the United States, and 
concluding: Tlease comment. 5 Stephenson's comment has not 
been recorded. It would probably be unprintable anyway. 

The actions of prominent Vichy French outside the Embassy 
did not go unnoticed. One of these was the former Popular 
Front Prime Minister Canaille Chautemps, who had helped to 
pave the way for Petain by intriguing against Reynaud for an 
armistice in May, 1940. For his services he had been rewarded 
with the post of Vice-Premier in the first Petain Government, 
but he had been ousted by Laval when the Marshal recon 
structed his Cabinet two months later. During the period of 
Laval's temporary eclipse, he had persuaded Petain to send 
him to America to attempt to keep faithful to Vichy those 
politically confused Frenchmen who, while being pro-Petain, 
were nevertheless opposed to collaboration with the Germans 
and were consequently beginning to flirt with de Gaulle and 
the Free French. For his services Chautemps received a 
monthly allowance of $2,000 from France's blocked dollar 
funds, but this was later withdrawn on orders from Vichy 
apparently because he was a Freemason. He was exposed on 
Stephenson's initiative in an article which depicted Mm as hop 
ing to capitalize on the State Department's dislike of de Gaulle, 
Marshal Petain's prestige and the apprehensions of some 
Frenchmen who wished to reinsure against a German defeat. 

While Chautemps got a five-year prison sentence from the 
French Purge Court after the war, other less conspicuous Petain- 
ists in the United States emerged comparatively unscathed. 
They included the writer Andre Maurois, whose activities 
formed the subjects of reports by Stephenson to London. 

Maurois, whose enthusiasm in the cause of Anglo-French 
goodwill had earned Mm an honorary K.B.E. from Bang 



104 

George V in 1938, abruptly changed his tune after the fall of 

France; on arriving in New York (where he established himself 
in the luxurious Ritz Towers) , he let it be known that in his 
view Britain had no hope of survival against Germany and that 
his own country's downfall was due in great measure to the 
failure of Britain to honour her pledges to France for adequate 
military support and assistance. Nor was his open hostility to 
Britain at this period without its pusillanimous side. When a 
French refugee published, under the pseudonym Andre Simon, 
an attack on the men of Vichy under the title J* Accuse (originally 
used by Emile Zola in vindicating Captain Dreyfus) , Maurois 
feared that the book might be attributed to him, as his first 
name was Andre and his wife's Simone. Accordingly he went 
to great pains to explain that not only was he not the author, 
but that in no way did he share the views expressed therein. 
Stephenson later learned that in May, 1941, Henry-Haye had 
cabled Vichy praising Maurois for his loyalty ('action loyale*) to 
Marshal Petain's government. 'By his numerous writings and 
lectures 5 , the Ambassador added, 4 M. Maurois has contributed 
to inform American opinion on the true facts of our situation. 3 
The result was that Henry-Haye received instructions from the 
Government at Vichy restoring Maurois's French citizenship 
and renewing his passport for two years. Colonel Bramble had 
been conveniently forgotten. 

Prior to the press revelations, Americans had tended to 
regard the Vichy French with sympathy and in some cases 
admiration. Now they realized that Henry-Haye and his 
henchmen deserved neither pity nor praise. They were not 
proud men trying to put a bold face on defeat, but Nazi 
hirelings and potential enemies of the United States. A few 
months later the mask was torn off when Laval rejoined the 
Vichy Cabinet as c Chief of the Government 3 , taking charge of 
the Ministries of Foreign Affairs, Interior (including secret 
police) and Information. 'Monsieur Laval and I are one', the 
Marshal declared on this occasion. The surrender to Hitler was 
complete. 



While preparing the exposure of the Vichy Embassy's under 
cover activities in the United States, Stephenson determined to 



105 

penetrate the Embassy Itself. Credit for the successful accom 
plishment of this objective belongs in large measure to a woman 
agent, whom he recruited to the B.S.G. organization in its early 
days. As a product of British intelligence, her achievement was 
to prove of incalculable value to the allied war effort. For sheer 
bravado it probably has no equal in the records of espionage 
during the last war. Not only did she secure the texts en claw of 
nearly all the telegrams despatched from and received by the 
Vichy Embassy, but she was also instrumental in obtaining the 
key to both the French and the Italian naval ciphers, which 
enabled the British Admiralty to read for the remainder of the 
war all the relevant cablegrams, radiograms and fleet-signals 
which were intercepted in code or cipher. 

As her story unfolds, it will become apparent that her peculiar 
feminine charms were the real instrument of her success. 
And yet, remarkably enough, she had no very obvious sexual 
allure. She was neither beautiful nor even pretty in the con 
ventional sense, although she had pleasing blonde hair. She 
was tall, with rather prominent features, and always appeared 
well dressed. There was certainly nothing about her which 
suggested that her virtue was easy. She was a pleasant com 
panion, for she was intelligent and talked well or rather 
listened well. She had a soft, soothing voice which doubtless in 
itself inspired confidences. It may be that her appeal to her 
victims was in the first place intellectual, and that the discovery 
of her bodily charms came later as an intoxicating realization. 
That she was physically very attractive cannot be doubted, 
since the powerful hold which she exercised over the diplomats 
whose secrets she succeeded in obtaining was clearly based on 
sex. But she had many other qualities. She was widely travelled 
and understood well the psychology of Europeans. She 
possessed a keen, incisive brain and was an accurate reporter. 
She was extremely courageous, being often willing and even 
anxious to run risks which her British employers would not 
permit. Her security was irreproachable and her loyalty to her 
employers complete. She was not greedy for money, but 
greedy only to serve a cause in which she believed. In fact she 
was paid a small salary which represented little more than her 
living expenses. The worth of her services could not be assessed 
in monetary figures. In the event it was priceless. 



io6 

For the purpose of this narrative she is called Cynthia, which 
was not her real name. And lest anyone reading these lines 

should think that she is in any sense the product of the present 
author's imaginations he must make it clear that he himself had 
the pleasure of her acquaintance at this period, but not in the 
manner enjoyed by some of her professional clients. For 
example, he still retains a vivid recollection of walking along 
Madison Avenue, New York, with her one afternoon in late 
August, 1941, and seeing the announcement in the head 
lines that Laval had been shot and wounded in an attempt 
on his life in France. Having bought a newspaper with the 
details, we adjourned to the hotel nearby, where she was 
living, and discussed the question of what might happen should 
Laval succumb to his injuries. However, Laval recovered and 
was destined to die, not from the bullets of an assassin but from 
those of an official firing party in the country that he had 
betrayed to France's traditional enemy. 

Cynthia's first major assignment, in which she won her 
spurs during the winter of 1940-41, was to obtain the Italian 
naval ciphers from the Italian Embassy in Washington. She 
began by securing an introduction to the Naval Attache, 
Admiral Alberto Lais, whom she lost no time in cultivating 
assiduously. He responded to her charms in the manner she 
desired, and soon within a few weeks of their first meeting 
he imagined himself deeply in love with her. As a result she 
was able to do with him virtually what she pleased. In retro 
spects it seems almost incredible that a man of his experience 
and seniority, who was by instinct, training and conviction, a 
patriotic officer, should have become so enfeebled by passion 
as to be willing to work against the interests of his own country 
to win a woman's favours. But that is what happened. 

As soon as she had him where she wanted, Cynthia came 
straight to the point. She told the Admiral that she wished to 
have copies of the naval cipher. Astounding as it may appear, 
he agreed without apparent demur to assist her. He put her in 
touch with his cipher clerk, who produced the cipher books 
after a suitable and satisfactory financial understanding had 
been reached. Photostatic copies were made by one of 
Stephenson's experts in Washington, and the results im 
mediately despatched to London. 



107 

In spite of the blow it received from the British Fleet Air 
Arm in its main base at Taranto in November, 1940, the 
Italian naval force in the Mediterranean at this period was 
considerable, consisting of six battleships, including two 
mounting 1 5-inch guns, nineteen modern cruisers and 120 
destroyers and torpedo-boats, besides over a hundred sub 
marines. Numerically it was far superior to the British Admiral 
Cunningham's Mediterranean Fleet, which was based on 
Alexandria. There is no doubt that Cunningham found the 
intelligence of the Italian fleet movements obtained from the 
naval ciphers of immense advantage in making Ms own fleet 
dispositions. For example, the major movement of the Italian 
fleet towards the Aegean in the latter part of March, 1941, was 
correctly anticipated with the aid of the ciphers, and resulted 
in a resounding British naval victory off Cape Matapan which 
put the greater part of the Italian fleet out of action for the rest 
of the year. 

For some time after securing the ciphers, Cynthia continued 
to meet Admiral Lais and was also able to learn details of other 
Axis plans in the Mediterranean. Finally Cynthia was respon 
sible for the Admiral's enforced departure from the United 
States. This came about in the following way. 

In the spring of 1941, there were numbers of Italian merchant 
ships lying in American ports, since their masters did not feel 
that it was either prudent or possible to attempt to get through 
the British blockade to Europe. Realizing that sooner or later 
America would enter the war and that these vessels would then 
be taken over by the Allies, Admiral Lais devised a plan to 
sabotage them. Fortunately he revealed to Cynthia how he 
had directed that the machinery of five of the ships at Norfolk, 
Virginia, should be put out of commission, and she immediately 
reported what she had learned. Stephenson thereupon caused 
the information to be conveyed to the United States Office of 
Naval Intelligence, which passed it on to the State Department. 
Although it was too late to stop most of the vessels from being 
damaged, further serious sabotage was prevented. All the ships 
were then seized by the American Government, as well as a 
number of German vessels which had likewise been sabotaged 
by their crews. Both the Italian and German Governments 
protested at the American action, but on April 3, 1941, the 



io8 

State Department returned strong replies, pointing out that 
the crews, in damaging their vessels to the detriment of naviga 
tion and the safety of United States harbours, had committed 
felonies under United States law in disregard of the hospitality 
that had been extended to them. At the same time Cordell Hull 
informed the Italian Ambassador, Prince Colonna, that his 
Naval Attache was persona non grata aiid requested his im 
mediate recall. The Ambassador had no alternative but to 
comply. 1 Admiral Lais never suspected Cynthia. As he was 
about to go on board the vessel which was to take him back to 
Italy, two parties were on the quayside to bid him farewell. 
One consisted of his wife and children the other merely of 
Cynthia, who stood alone some distance away. The lovesick 
Admiral spent his final minutes with her and ignored his 
tearful family entirely. 

In the following month, Cynthia was instructed to concentrate 
her attention upon the Vichy Embassy in Washington. Posing 
as a newspaperwoman and accompanied by a female assistant, 
she called at the Embassy to keep an appointment which she 
had made for a press interview with the Ambassador. At first the 
two ladies sat for a time with a senior member of the Embassy 
staff who talked to them while they were waiting for Henry- 
Haye.For the purposes of this narrative he will be called Captain 
Bestrand. He talked to the two visitors for nearly an hour, and 
by the end of that time Cynthia knew that she had achieved 
her first objective. As the gallant Captain escorted them to the 
Ambassador's office, he expressed the wish to see her again. 

The two newspaperwomen had a long c off-the-record' dis 
cussion with the Ambassador. He was an excitable man in the 
best of circumstances, but on this day he appeared quite over 
wrought as he had just had a particularly unpleasant interview 
with Secretary of State Hull. Nevertheless he did his best to 
explain for the benefit of his discreet and appreciative audience 
the very difficult mission with which he had been entrusted, 
On the subject of Franco-Germanrelationshespokeveryfrankly. 
'France's future requires co-operation with Germany 3 , he said. 
*If your car is in the ditch, you turn to the person who can help 
you to put it on the road again. That is why we will work with 
Germany. 3 

* Hull II, 927. 



iog 

The Ambassador was neither reticent nor unduly cautious. 
The occasion seemed to be a useful one in which to communi 
cate to the American public some of the anti-British feelings he 
had expressed at his first staff meeting, He talked on and seemed 
in no hurry to finish the press conference, perhaps as a result of 
Cynthia's soothing influence. When at last the ladies rose and 
he showed them to the door, he told Cynthia that he would be 
glad to see her again at any time she cared to call at the Embassy. 

Both the Ambassador and his staff officer did see her again. 
The Ambassador saw less of her than he would have liked. The 
officer saw more of her than was good for him. Very soon 
Captain Bestrand was completely infatuated and under her 
control, just as the Italian Admiral had been. Bestrand was 
married, but was at an age perhaps when the chance of a new 
conquest beckoned strongly. What is more, he was In every 
respect an emotional man. He felt especially bitterly towards 
the British for their action at Mers-el-Kebir. While he enjoyed 
the confidences of the Ambassador possibly more than any 
other member of his staff, nevertheless Bestrand despised 
Henry-Haye as a parvenu and a bourgeois, and thought that he 
himself, with his superior culture and family connections, 
would have made a better and more appropriate Ambassador. 
Like many Frenchmen at this time he expressed a hatred of 
Laval, and in so doing gave Cynthia an opportunity of which 
she made good use. Gradually, under the guidance of her 
employers, she stimulated Bestrand's feelings against Laval, 
and as her personal influence with the Captain Increased, she 
persuaded him to talk more and more about Vichy affairs. Soon 
he was answering prepared questions and giving valuable infor 
mation about Vichy's underground activities in the United States. 

In July, 1941, the Vichy Government decided to abolish 
Bestrand's post in the Embassy. However, Henry-Haye retained 
Bestrand as a member of the Embassy staff, since he found him 
useful, and he paid him a small salary out of his secret funds. 
This substantial cut in Bestrand's Income occurred at a psycho 
logically opportune moment. Cynthia made a 'confession* to 
her lover. She told him that she was an agent of the United 
States Government and suggested that, in return for a cash 
consideration, Bestrand should pass her information about 
Embassy affairs. She pointed out that this was the only possible 



no 

course for a patriotic Frenchman like himself and the only way 

to defeat Laval, and the Germans. 

Bestrand agreed, and from then on information flowed into 
Stephenson's office from the Vichy Embassy. This eventually 
embraced every happening of importance and every current 
outgoing and incoming telegram, together with those of older 
date. Acting on instructions Cynthia also asked Bestrand to 
write a daily report of what went on in the Embassy, and chese 
detailed reports filled in many gaps by supplying necessary 
background and enabling certain telegrams to be more easily 
understood. This daily news-letter related the particulars of all 
the Ambassador's appointments and the results of the interviews 

he gave. 

The telegrams indicated what Stephenson had long sus 
pected, namely that the Ambassador and his Naval Attache 
were engaged in collecting intelligence to the detriment of the 
British war effort for transmission to Vichy. For example, on 
June 15, 1941, the Naval Attache despatched a telegram, 
counter-signed by Henry-Haye, to Admiral Darlan, the anti- 
British Minister of Marine in Vichy, giving him information 
(for which he had apparently asked) of the location of those 
British warships which had come into American dockyards for 
refit. The Naval Attache stated that he had learned c from a 
reliable source 3 that the aircraft carrier Illustrious was at Norfolk, 
Virginia, the battleship Repulse was at Philadelphia, and several 
cruisers were in New York in addition to the Malaya, news of 
whose presence there he had already signalled. 'All these war 
ships are undergoing extended repairs 5 , he added. 'The first to 
be ready will undoubtedly be the Malaya, which will be 
immobilized for at least another month.' 

Like all the other telegrams, the above signal was handed 
over in its deciphered form. Cynthia was shortly to be asked to 
obtain the naval cipher in which the signals were sent. This was 
to prove the biggest challenge and the most spectacular feat in 
her career as an intelligence agent. 



In working against Vichy, Stephenson co-operated as far as he 
could with the Free French delegation and its leader Count 



Ill 



Jacques de Sieyes, who was General de Gaulle's chief personal 
representative in the United States. This liaison had necessarily 
to be conducted with circumspection since the State Depart 
ment made it clear that, while sympathizing with de Gaulle's 
stand, it could not consider recognizing officially his right to 
speak for the French people as a whole. The Free French were 
naturally interested in the fate of France's colonial possessions 
in the Western Hemisphere which had now come under the 
control of Vichy, particularly the island of Martinique in the 
West^ Indies. This island was under the dictatorial rule of 
Admiral Georges Robert, who was fanatically loyal to Marshal 
Petain. He had charge of the Vichy gold reserve valued at 
$245 millions, which had been sent to the island in the cruiser 
Emile Berlin and was closely guarded in an old stronghold. Fort 
Desaix, near Fort-de-France, the capital. Besides the Emile 
Bertin, there were several other French warships including the 
aircraft carrier Beam, several merchant vessels and over one 
hundred fighter planes, mostly of American manufacture, which 
had been on their way to France at the time of the collapse. 

Towards the end of August, 1940, Stephenson cabled London 
that there was a possibility of organizing a scheme to be carried 
out by c a reliable Frenchman' for a coup in Martinique, 'which 
would release to ourselves gold, ships and aircraft', and he 
asked whether there were any objections. In due course he was 
informed that, 'provided you are not implicated and the 
scheme is entirely organized by the French, it is viewed 
favourably'. 

The 'reliable Frenchman' was a huge, swashbuckling char 
acter from Martinique named Jacques Vauzanges, who had 
two sons living on the island and who knew many of the French 
officials and naval officers stationed there. Vauzanges planned 
to organize the anti- Vichy elements in the colony and to 
endeavour to alter the outlook of the others by propaganda. 
Should the coup prove successful and result in Martinique and 
the neighbouring island of Guadeloupe transferring their 
allegiance to de Gaulle, the warships would be sent to a 
Canadian port, probably Halifax, where they would join the 
British fleet, while the gold would be placed at the disposal of 
the Free French. 

On his arrival at Fort-de-France, Vauzanges found the 



112 

situation less encouraging than he had supposed. While the 
local population seemed on balance to favour de Gaulle, 

feeling generally in the islands was apathetic and more 
interested in improving living conditions, alleviating un 
employment and obtaining essential products such as fud oil, 
of which there were severe shortages owing to the British 
blockade, than in any schemes for overthrowing Admiral 
Robert's government. 

The date chosen by Vauzanges for putting his plan into 
execution was September 23, 1940. Unfortunately that was the 
very day on which the Anglo-Free French expedition to Dakar 
was beaten off by the Vichy defences and de Gaulle suffered a 
striking set-back. Had Dakar been taken, things might have 
turned out differently in Martinique. As it was, the officers who 
were designed to form the backbone of the projected coup drew 
back and refused to play the part expected of them. Public 
opinion in the islands swung away from the Free French move 
ment and the unlucky Vauzanges had to abandon his project 
altogether. 

Vauzanges stayed on in Martinique for several months and 
spread as much anti- Vichy propaganda as he could before 
eventually returning to New York where he made a detailed 
report to Stephenson on conditions in the islands. He recom 
mended that the blockade should be tightened, since there was 
a very real danger that the islands might be used as a base for 
refuelling German submarines so long as they remained under 
Vichy's control Meanwhile the United States sent Admiral 
John W. Greenslade on a special mission to Martinique in an 
endeavour to persuade the Governor to hand over the planes 
for transfer to Britain, But Admiral Robert remained obdurate 
and the much-needed fighter aircraft were allowed to rust away. 

On May 16, 1941, Mr. Churchill sent the following minute 
to General Ismay, his Chief of Staff, as Minister of Defence: 

What is the situation at Martinique? Are the 50 million 
pounds of gold still there? What French forces are there? What 
French vessels are in harbour? I have it in mind that the 
United States might take over Martinique to safeguard it from 

being used as a base for U-boats in view of Vichy collaboration. 1 

1 ChurchilL II, 682. 



The answers to these and similar questions were provided by 
Stephenson's organization, supplemented by copies of Admiral 
Robert's telegrams which were obtained from the Vichy 
Embassy in Washington, as well as information gained from 
inhabitants who had escaped to the nearby British island of 
St. Lucia. 

The United States declined to act on the British Prime 
Minister's suggestion that they should occupy the islands., but 
they did send another mission to Martinique which eventually 
reached an understanding with Admiral Robert that the 
islands should not be used in the manner that Churchill had 
feared. But the Admiral raised so many objections to carrying 
out the agreement that eventually, in 1943, the State Depart 
ment withdrew its Consul-General from Fort-de-France and 
adopted Vauzange's suggestion of imposing an economic 
blockade. Shortly after this Admiral Robert resigned and the 
islands came under Allied control, relief supplies were 
despatched to the civilian population and the previously 
immobilized naval and merchant vessels made available to the 
anti-Axis war effort. 

Stephenson's co-operation with the Free French movement 
bore better fruit in the matter of two other Vichy-controlled 
islands. These were St. Pierre and Miquelon, off the Newfound 
land coast, which were also under Admiral Robert's juris 
diction. Both the British and Canadian Chiefs of Staff had 
urged that the islands should be taken over, preferably by Free 
French forces, since there was reason to believe that Vichy 
agents were tapping the Western Union transatlantic cables 
which passed through St. Pierre and also passing information 
on allied convoys to the enemy by means of fishing boats which 
made an excellent cover for this type of espionage. The 
Canadian Department of External Affairs considered that any 
British participation in the proposed venture, such as had taken 
place at Dakar, might inflame anti-British feeling in the French- 
speaking provinces of Canada, and suggested that the Free 
French should be allowed to occupy the islands 'under Canadian 
supervision'. 

Meanwhile, in order to avoid a repetition of the Dakar 
fiasco, de Gaulle's representatives in the United States 
requested Stephenson's assistance in ascertaining the precise 



political feelings and aspirations of the inhabitants of St. 
Pierre and Miquelon. Accordingly Stephenson sent a number 
of agents into the islands and their investigations revealed 
that 97 per cent, of the population were for the Free French. 
These findings were embodied in a comprehensive report which 
was sent to London in the autumn of 1941 and shown to 
General de Gaulle. The latter now determined to liberate the 
islands on Ms own without Canadian or any other supervision, 
which the Free French naval forces were quite capable of 
doing. While the Foreign Office in London had no objection, 
both the State Department in Washington and the Department 
of External Affaire in Ottawa were opposed to any move which 
might result in an embarrassing political situation. With the 
latter view President Roosevelt agreed. In these circumstances 
the General was asked to refrain from taking any action, and 
according to Churchill, he certainly said he would do so. 1 At 
the same time de Gaulle's 'shadow 5 Minister of Marine, 
Admiral Einile Muselier, who had been sent to Ottawa, was 
officially informed of the Canadian and American views. 
Acting in complete disregard of these views, de Gaulle peremp 
torily ordered Muselier to take over the two islands. This the 
Admiral was reluctantly obliged to do. Muselier's Free French 
expedition landed on Christmas Eve, 1941, and met with an 
enthusiastic reception from the local people. 

Secretary Hull reacted sharply in Washington, doubtless 
fearing that otherwise Marshal Petain might retaliate by 
granting the Nazis bases in North Africa. On Christmas Day 
he issued a statement from the State Department, which had 
been drafted by one of his senior assistants, condemning the 
action taken by the 'so-called Free French ships' as arbitrary 
and contrary to the agreement of all parties concerned. Hull's 
singularly ill-chosen reference to the Free French brought 
coals of fire upon Hs venerable head and was indeed widely 
resented. The American press was soon full of scornful remarks 
about 'the so-called State Department' and letters of protest 
were addressed to e the so-called Secretary of State*. The British 

1 Churchill, III, 590-1. On December 17, 1941, the Foreign Office told 
the State Department that President Roosevelt's view had been communi 
cated to de Gaulle Vho agreed that the proposed action should not now be 
undertaken*. Sherwood. I, 456. 



Prime Minister was spending Christmas with the Roosevelt 
family at the White House, where the irate Secretary of State 
turned up and asked Churchill to get de Gaulle to withdraw 
his forces. When Churchill demurred to this request, Hull 
accused him of being behind the whole operation, which of 
course was not true. The President, who thought the Depart 
ment's statement ill-advised and flatly said so, was inclined to 
shrug off the affair as a 'teapot tempest'; but Hull refused to be 
mollified and went off in a huff to Florida where he seriously 
contemplated resigning and for a time refused even to talk to 
the President on the telephone. Eventually a compromise was 
reached by which a semblance of Vichy sovereignty was 
restored in the islands while the radio station was placed under 
strict allied supervision so that it could be of no possible aid to 
the Germans. Meanwhile a plebiscite was held in St. Pierre and 
Miquelon. The result showed that 98 per cent, of the people 
were against Vichy and for freedom from an obnoxious regime. 
It also showed that the estimate formed by Stephenson*s 
agents was only i per cent, out and that was on the con 
servative side. 



In March, 1942, Stephenson received a message from 
London asking him to endeavour to obtain the French naval 
cipher, which was used not only by Vichy naval attaches 
serving in foreign missions but also by the fleet commanders. 
Plans were beginning to take shape for an allied invasion of 
North Africa, and it was of the utmost importance for the 
British Admiralty to be able to follow the signals sent by the 
Ministry of Marine in Vichy to the fleet in Toulon and the 
North African ports, so that those concerned could be kept 
informed of the ships' intended movements. 

Cynthia was instructed to approach her friend Captain 
Bestrand. She promptly did so, and Bestrand was flabber 
gasted by her suggestion. He said it was an impossible task, and 
that the only persons who had access to the code room were the 
Chief of Codes, a man named Benoit, and Ms assistant, Count 

d e la L . Furthermore, the room was always locked and 

the telegrams were taken by the Embassy Counsellor in person 
to the code room. 



n6 
'Do you mean that even you haven't access to that room?' 

Cynthia asked. 

'Nobody has/ Bestrand said. 'At one time the Naval Attache 
used to go to the code room more often than seemed necessary, 
just out of curiosity which was second nature with him. The 
Ambassador himself how do you say it? ticked him off. In 
fact he sent him a note forbidding any more visits to the code 



room. 



'What about night time? Do they work all night?^ 

'No, but the room is carefully guarded at all times. The 
Foreign Affairs Ministry recently sent instructions that a 
permanent watchman should be on duty at nights^ and on 
holidays to guard the whole of the Embassy premises/ 

'How big are the cipher books? 5 continued Cynthia. 

'So big/ Bestrand answered, 'that if anybody could smuggle 
them out their absence would be noticed at once.' 

Cynthia then asked about Benoit. 

'He is a bear who has lived for the past twenty years with his 
work,' said Bestrand. c He has no needs, no ambition and no 
imagination. He arrives in the Chancery, says good morning to 
no one and goes straight to the code and cipher room. 3 He 
added that 'no arrangement could be made with Benoit 5 . 

Nevertheless, although Benoit was utterly loyal to Marshal 
Petain, he became confused and unhappy when Laval returned 
to power in Vichy, as he did at this time, and began to pursue 
a policy of open collaboration with the Nazis. This was too 
much for old Benoit, and he resigned his job. 

Thereupon Cynthia went to him and told him that here was 
a chance to serve France. 'Our desires and aims are the same 
as yours,' she said. 'We want to help France because we know 
that by doing so we will also be helping the allied war effort. 9 

The old man's eyes filled with tears. 'I am very confused/ he 
said, 'I have had no time to think. Everything has happened so 
quickly.* 

The ciphers could provide the key to show how much the 
traitors in the French Government are helping the Germans,* 
Cynthia quickly came to the point. 'To turn them over to us 
would be the greatest service you could perform for your 
unhappy country.* 

'But I cannot do that, 5 Benoit replied. 'Everything is so 



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confusing,' he kept repeating. 'Everything has happened so 
quickly. 5 

'Your loyalty should be to the French people/ said Cynthia. 
*Not to a government of traitors. 3 

Benoit thought hard. At last he reached a decision, difficult 
and painful for him as it was disappointing to Cynthia. *I 
cannot/ he said finally. *I have a long record of loyalty to my 
chiefs. All of them have written me letters. The codes and 
ciphers have been my responsibility, my personal responsibility. 
To guard them has been my duty.* 

Regretfully Cynthia had to abandon her attempt, having 
told her employers that here at least was one among the 
traitorous Vichy crew who remained faithful to Ms principles. 
Indeed Benoit stands out as a man who deserved to serve a 
better cause than the one he refused to betray. 

On Benoit's resignation, Count de la L took over 

the charge of the code room. He was a young man with a wife 
and growing family, and there was good reason for believing 
that he was short of money. Cynthia, whose energy and 
persistence were boundless, did not have to be told what to do 
next. She at once began to cultivate him, though she was 
careful not to let Bestrand know what she was doing. De la 

L 's wife was having her second child at the time and 

he himself was a little bored and glad to find such a sjmpathique 
companion as Cynthia. 

Soon she was telling him her views about Laval and express 
ing astonishment that any loyal Frenchman should associate 
himself with such treacherous policies. Gradually she worked 
round to the subject of the naval cipher, and she stressed the 
immense assistance that its possession could render the enemies 
of Germany. As a further inducement she offered him a lump 
sum of money immediately if he would procure it for her, and 
a monthly retainer thereafter if he would keep her advised of 
any changes in it that might be made. 

f) e i a L appeared to be torn by doubts, but in the 

end he refused. In fact, his apparent doubts were pretended. 
He went straight to the Ambassador and told him the whole 
story. He somewhat exaggerated the sum Cynthia had offered 
him, and added that she was in the employ of the United States 
Intelligence Service. 



n8 

This sensational account immediately spread round the 
Embassy. Naturally Bestrand heard of It, but he refused to 
believe It. He went to Henry-Haye and protested that it was 

untrue. He told him that de la L was unreliable. Had 

he not beea spreading rumours about the Ambassador's 
supposed affair with an attractive Baroness? Obviously the man 
was a liar, said Bestrand, and having circulated such a malicious 
and damaging tale about the Ambassador, he was doubtless 
addicted to spreading equally untrue stories about other people. 
Henry-Haye heartily agreed. He immediately sent for de la 

L and soundly reprimanded him, ending up by telling 

him that he was to be withdrawn from the code room. 

Cynthia had been extremely lucky. She had also been most 

astute in concealing her association with de la L from 

Bestrand. Now she devised a new plan for obtaining possession 
of the naval cipher. This involved Bestrand' s co-operation, but 
his part was to be relatively simple as well as thoroughly 
congenial When he heard the details, he agreed to co-operate 
without demur. In the event he did so most willingly. First of 
all, he supplied a floor plan of the Embassy, and with the aid of 
this the final dispositions were made. 

One evening Bestrand arrived with Cynthia at the entrance 
to the Embassy. The watchman was on duty, and Bestrand took 
him aside, speaking in confidential undertones. He explained 
that he had nowhere else to go. Washington was crowded, he 
said, and anyway it would not do for a member of the Embassy 
to be seen in a hotel. The watchman's assistance was facilitated 
by a generous tip. He told Bestrand that he and Ms amie could 
spend the night on the divan on the first floor. A night or so 
later they came again, and the visit was repeated on several 
subsequent nights. Thus the watchman became accustomed to 
their comings and goings. 

Then, one night in June, 1942, a cab drove up to the 
Embassy and deposited Bestrand and Cynthia. They appeared 
to be in festive mood, and the watchman noticed that they had 
brought several bottles of champagne with them. They invited 
the watchman to join them in a glass, and he gladly accepted. 
But the watchman's drink had been doctored with a powerful 
sleeping draught, and soon he was fast asleep. Cynthia then 
admitted the cab driver, who had been waiting for their signal 



in his taxi outside. This man. was also an expert locksmith, and 
he immediately set about his appointed task. First he removed 
the lock from the door leading to the Naval Attache's office. 
Then he worked out the combination of the safe in the code 
room. It took him three hours to complete the job, which had 
to be done silently and without leaving any trace of his presence. 
This meant that there was insufficient time in which to deal 
with the cipher books. But the most difficult part of the under 
taking had been accomplished, and it only remained to put the 
knowledge thus obtained to the required use on the next 
occasion. 

Two nights later Bestrand and Cynthia paid another 
nocturnal visit to the Embassy. They did not consider it 
advisable to drug the watchman again, since he might realize 
that the fact of his falling asleep for a second time was some 
thing more than a coincidence and so report the matter to his 
superiors next morning. Also Cynthia sensed that he was already 
a little suspicious and was probably intent upon finding out 
whether she and Bestrand were up to any Tunny business'. 
It was therefore essential that some effective method should be 
used for keeping him well out of the way. The expedient to 
which she now resorted was very simple. It was designed to 
satisfy the watchman's curiosity in a totally unexpected 
manner. 

As soon as she and Bestrand were alone, she prepared herself 
for a surprise entrance on the part of the watchman. Sure 
enough he appeared about twenty minutes later to find 
Cynthia completely undressed. He hastily withdrew in con 
siderable embarrassment but perfectly reassured that the 
visitors had no other purpose for spending the night in the 
Embassy than the mutually agreeable one which Bestrand had 
originally intimated. The watchman's behaviour made it clear 
that he would not trouble them again with his presence. 

The locksmith was now admitted through a window and lost 
no time in utilizing the knowledge that he had gained on his 
previous visit. Within a matter of minutes he was able to reach 
the safe and open it. The naval cipher books were instantly 
removed and handed through the open window to another of 
Stephenson's agents who was waiting outside. They were then 
rushed by car to a convenient house nearby where a photostat 



I2O 

was made of each page. By 4 a.m. well within the time limit 
the books were back in the Embassy safe, and there was no 
that they had ever been abstracted. Twenty-four hours 
later the photostatic reproduction of the Vichy French naval 
cipher reached the Admiralty in London. 

Those who participated in the successful landings in North 
Africa a few months afterwards would have been surprised to 
how much the preparations for the elimination of Vichy 
naval on that occasion owed to the determination of 

a quiet Canadian allied with the courage of a clever woman, 
who off her clothes in the French Embassy in Washington 
in circumstances which are hardly likely to be repeated. 
Incidentally,, Cynthia and Bestrand are now happily married. 



CHAPTER V 



SPECIAL OPERATIONS 



IN a press interview which he gave in London shortly 
Congress had passed the Lend-Lease Bill, Dr. Dalton, the 
Minister of Economic Warfare, told American 
that the United States could now best help Britain by the 
'freezing of enemy assets, co-operation in "blacklisting 1 * 
commercial firms, and co-operation in the control of 
bunkering*. He went on to name certain American 
he said had 'traded with the enemy". These the 

General Aniline and Film Corporation^ the Corpora 

tion of Bloomfield ? New Jersey, and the 
Corporation of New York, all of which were really 
of German industrial or commercial concerns. In the 
connection Dr. Dalton also mentioned the National 

This statement provoked strong reactions when it 
in the American press. While the firms in hotly 

the charges. Secretary of State Hull was to 

*made very angry* by them and to have the 

that in one of the cases at least s that of the National 

they were unfounded. 1 The facts on which the 
Ms statement had, of course, been by 

They had also been brought to the of the U.S. 

Treasury, where they met with a very 

that accorded them by the Department, la fact, Mr, 

Henry Morgenthau, the Secretary of the Treasury, the 

British Embassy in Washington to a to Dr. 

expressing warm approval of his which Mr, 

described as Very friendly to the United States*. 1 

For a considerable number of the war the 

1 The Chase National Bank was criticized for its with the 

bank which apparently the German Treasury. 

* MedHcott. II, 33-4. 

121 



122 

German corporations, such as I.G. Farbenindustrie 

and A.G., had methodically consolidating their 

in the United States. This was done In two ways: 
Erst, the and subsidiaries In the U.S.A. of 

German-owned which were usually camouflaged 

by in Sweden or Switzerland; and secondly, 

by the carte! of German parent companies 

their American subsidiaries. When Germany went to war 
IE 1939,, this vast and intricate network of companies became 
the of the German intelligence and propaganda 

systems in the Western Hemisphere, and its existence en- 
the security and the economy of both Britain and the 
States. To a of combating and if possible 

of liquidating it was one of the most urgent problems confront 
ing on his first arrival in New York. 

of German subsidiaries were 

as American companies and staffed by American 

had to achieve his objective without 

opinion, particularly as represented 

in To vrith, he had to obtain absolute proof of 

the of direct connections between Germany and the 

operating under cover in the United 

So as the United States remained neutral, this 

was not in under federal law. So it was necessary 

to go a further provide evidence which would justify 

the United authorities taking action on technical grounds^ 

as the of the anti-trust Iaws 5 by showing the 

of between the German parent 

the 

The company to attract Stephenson's 

was A.G., the Berlin chemical firm, which 

had one of the largest exporters of German 

medicinal products between the wars. Its 

its extremely efficient export 

a Jew named Julius Weltzien, whom the Nazis had 

to the United States. The Schering 

Corporation of had been established in 1939 as a 

of the Berlin company in such a manner 

It if on its own. Weltzien was its 

its vice-president was an American physician called 



123 

Dr. Gregory Stragnell, and Its secretary was an American 

naturalized German named Ernst Hammer. It a!! the 

parent company's patents and trademarks In the U.S.A. 

the outbreak of war and the advent of the British It 

had taken over, by agreement with Berlin^ the of supplying 

the Sobering subsidiaries in Latin America which had formerly 

been supplied by Sobering A.G. For this purposej the 

field corporation had been supplied with German-type 

packages, labels, prescriptions and full instructions, 

varied from country to country. The 

it should also be noted, was nominally a of two 

holding companies controlled by the Swiss 

of Basle, through which in fact the subsidiary 

Stephenson first learned of these facts from a worried 

of the Bloomfield corporation^ who was a German 

awaiting American naturalization. When he 

that the firm for which he was working was in a 

sidiary of Schering A.G., Berlin^ and the 

ownership was merely a blind, he had to the 

Department^ where he had succeeded in obtaining an 

with Assistant Secretary Adolf Berle s who to 

what he had to say and remarked: 'Very interesting.* Mr. 

subsequently wrote a confused report on the 

began: 'From a source the reliability of which is not 

I have learned the following. . . .* When the 

employee discovered that the State Department not 

interested, he went to the Department of Justice^ to be 

informed that there was no legal action which 

He was advised to get into touch with the la 

course met one of Stephenson^s the 

manager of the Berlin branch of an He 

advised to go back to Ms job in Bloomfield, N.J., for the 

being and to try to collect documentary proof of his 

Gradually he began to accumulate the 
He would bring the files to in a In 

mid-town Manhattan; they be 

the originals returned next morning* However, this 
did not furnish conclusive proof of the 
since the Bloomfield corporation's 
careful in wording their the 



124 

companies, which they knew was liable to be 
intercepted by the British censorship in Bermuda. Consequently 
It was to manufacture evidence of the facts which had 

but which could not otherwise be proved, 
agent persuaded the Schering employee to 
procure of the Bloomfield corporation's letter-heads, 

brought to Stephenson's office where incriminating 
written for the signature of the employee, who was a 
of the corporation's staff. Whenever 

to their Swiss addresses, Stephen- 
son Bermuda where they would be intercepted 
by the censorship examiners who would send 
to as 'submissions*. 

The complete revealed that the Berlin company 

its hold on many important world markets; that a 

of contraband was reaching Germany in spite of 

the and further that half the considerable 

of the American Schering concern found its way 

to Switzerland, The total amount of foreign 

in this way during the year 1940 was 

at over two million dollars a month, Finally, the 

corporation's participation in cartel agreements 

to the Anti-Trust Act was established 

doubt. the Department of Justice and the press 

with full particulars by Stephenson's organiza- 

The campaign was taken up throughout the country 

by a newspapers as well as by many 

commentators. 

In the the Schering Corporation of Bloomfield, N.J., 

$15,000, its president and vice-president $2,000 

on being convicted of 'conspiracy to 

trade 9 ; the company's board was purged of all its 

of German except Weltzien; the practice of 

for Latin America was stopped; and the 

was ordered to divest itself of all stock 

ia the corporation within three months. 

had learned that Dr. Stragnell, the 

had trying to obtain control of the Canadian 

for the Bloomfield corporation. He there- 

the of Enemy Property in Ottawa to 



1*5 

be advised to sell the Canadian subsidiary to the 
corporation. This was done and the purchase price 
$150,000 was paid over. Twenty-four hours later the Custodian 
was supplied by Stephenson's organization with of con 

tinuing German control which him to the 

of the company's assets. Thus the corporation lost its 

150,000 and Dr. Stragnell and the other 
were discouraged from making any similar in the future. 

After Pearl Harbour 3 the U.S. Treasury over the 
control of the Schering Corporation of Bloomfield, N J. All its 
common stock was acquired by the American Government 
henceforward the business was conducted the 

of federal officials. But long before time,, to the 

energetic measures of Stephenson his its Nazi 

wings had been effectively clipped. 



A much more formidable target for the 

concern was the colossal German dye 
as LG. Farben, or to give it its full name^ 
Farbmindustrie With a of 

reichsmarks, it was probably the of its 

in the world. An official of the Anti-Trust of the U.S. 

Department of Justice described it as s an of 

monopolies and an aggregation of cartels". Its United 

States subsidiary was one of the by Dr, 

Dalton, namely the 625000,000 General and 

Corporation of New York (known the 
as the American LG. Chemical Corporation). It 
links with Sterling Products Inc., the in 

Ameiica s and the Bayer group which as 

well as with the Standard Oil of New Jersey and the 

Ford Motor Company of Detroit (The of 

Cologne was a wholly owned of LG* 

Stephenson's exposure of the LG* in the 

Americas was in an 

called to the was pat on sale for 25 

and told the American the story" of 

your dimes and quarters pay for Hitler's war\ 



128 

the various ramifications of the German 

trust, it disturbing rumours calculated to deter 

the American public buying Farben's pharmaceutical 

One was that the archives of the trust's head office In 

had hit by British bombing aircraft and the formulae 

with the that many deaths had been caused 

by wrong prescriptions. The publication aroused widespread 

at the time. The managing director of Standard Oil of 

New Jersey, with LG, Farben was clearly 

'told an American contact of Stephenson's that he 

give to know who was behind this publication. 

One of the of the campaign was that William vom 

the German-born director and secretary of the General 

and Film Corporation,, was obliged to resign his offices. 

f Vom was in LG. Farben, was a relative of 

Rath, secretary in the German Embassy in Paris, 

by a young Polish Jew, Her&chel Grynzspan, 

in was the for one of the worst Nazi pogroms.) 

of to the was that Sterling 

had given LG. Farben an undertaking not to 

sell any in Britain, Canada, Australia, 

or was together with three subsidiary 

$5,000. 

American firm, which traded secretly with Germany, 

was the German-controlled Pioneer Import Corporation, 

was by Werner von Clcmm, a former German 

had married the daughter of a rich Anglo- 

and had himself become a United States 

He had as well as business relations with 

of Ms married to army officers and 

Ms the of Foreign Minister Eibbentrop. His 

in a variety of commodities^ including hops* 

diamonds and carried on an 

with Germany in an intricate plain- 

He to have imported diamonds, 

and Holland, on certificates of origin, 

in due in the through Stephen- 

In von Clemm was convicted 

to two years* and a fine of $10,000; 

in Ms were seized* as well as 



12" 

semi-precious stones to the value of $400^000 to his 

company. During his trial the U.S. Treasury representative 
went out of his way to thank his "newspaper for 

assistance in the investigation. 

Information proving the German ownership in all of over 
one hundred German-owned subsidiary in the 

United States was furnished by Stepheason to the United 
States authorities. After the entry of America the war it 
enabled the Alien Property Custodian to the of these 

subsidiaries amounting to some 8260 millions. 

Stephenson also kept a weather eye for secret 

economic agents whom Germany might on 

missions. We have already what Dr. Gerhard 

Westrick. In March, 1941, there arrived in Brownsville, Texas, 
on a visitor's visa from South America^ a particularly 
German. This was Dr. Kurt Heinrich Rieth, 
made a fortune as Standard Oii ? s in 

and who was himself a former member of the 
matic service. At the time of Austrian Chancellor 
assassination in 1934, Rieth had German in 

Vienna, where he had so conspicuously involved 
the murderer of the unfortunate Chancellor 
obliged to recall him to Berlin in disgrace. On his in 

New York, Rieth settled in to a $6oo-a-month in the 

Waldorf-Astoria 3 where he proceeded to 
officials and also to make free and frequent use of the of 

Standard Oil's chairman Walter Teagle as a 
RIeth's movements were carefully shadowed, 
soon discovered that the main of Ms to 

tiate the sale to Germany of the Oil 

subsidiary company known as M.A.O.R.T. for 

Olajipari Tarsasag}. He 

Standard Oil representatives the 

between Ms company and LG. Farben. Then he in 
with the Inter-American Abstention an 

inspired body which recently the 

avowed purpose of hindering all of aid to 

Britain 3 with particular on 

Stephenson lost no time in on the 

familiar lines. On May 24, 1941, a 



128 

of Rleth's appeared in the New Tork Herald- 

the following headlines: 



NAZI AGENT IS 
ON SECRET MISSION 
OIL HOLDINGS 



Rieth, Figure in Dollfuss 
Castj is Standard 
Properties in Hungary 



Used Teagle ? s Name 
To Win Confidence 



Oil Man Denies Knowing 

Him; Secondary Errand 

Is to Fight Aid 

The in other newspapers and caused the 

While Standard Oil said they had never heard 
of Dr. Ricth^ the in question shut himself up in his 

where he reporters on the telephone 

he in the United States on purely personal business*. 
Eventually the F.B.I, arranged with the Immigration Depart- 
to for giving information in Ms visa appli 

cation, he ostensibly entered the country as a tourist, 
He to Island where he was held until he was 

with the German and Italian con- 
who left on the s.s. West Point when their offices 
by in July, 1941. 

the war historian of the British 

has a warm tribute to the manner in 

of the Security office^' Ms euphemism 

for B.S.C. in conjunction with the British 

Mr. R. J. Stopford^ the shrewd 

at the British Embassy in Washington, 

to American public opinion to meet the 

of the 'freezing 5 Axis assets and 

American financial and commercial 

Pearl Harbour. *These all worked for nearly 

a year in but with the United States 



Treasury, the Department of Justice, the F.B.L, and 

authorities, and had given much-needed 

Axis financial interests and activities in the United and 

Latin America. As a result the United was 

ready when the time came to any 

measures of economic warfare that might 

acting in the Axis interest. 51 



Another aspect of secret economic warfare, with 

son and Ms organization were concerned, was the 

prevention of smuggling, particularly 
but high value. 

The professional smuggler in 

attempting to get his illicit the 

economic blockade. Preventive 

little chance of success they and 

well organized. With the 
fake bottoms were commonplace. A 

was smuggled into Buenos Aires the 

Atlantic disguised as a piano. The in 

placed diamonds their of 

sent to Stephenson stated in the 

drinking cups of canary cages; this 

modity was conveyed in the form of 

postage stamps on ordinary letters* One by the 

Argentine customs carrying twenty of the in 

powdered form a to his 

was arrested in Gibraltar for 

a camera loaded with the 

radio installation. Platinum out 

in tins of peaches, a in the 

pot in the cook's 

coins and, having the of 

buckles,, fitted them to In to 

the was an art. 

Neutral shipping was the the 

used^ and before Pearl this not 

1 Medlicott. II, 45. 



and Vichy French vessels, but also ships of the United 

States merchant navy. Since it was nearly always the small but 

in which the were interested^ many 

crews regular couriers who regarded 

the as a of increasing their normal income. 

In 1941 particularly, the advertisement columns of 

in North and South America were full of 

by who were willing to 'serve as a 

contractor* or 'undertake important confidential commissions, 

etc/ 

It was with the object of combating this threat that Stephen- 
son a of ships" observers originally suggested 
by a of his staff. One or more observers would be ap 
pointed the crew of every neutral ship sailing from the 
United and Latin American ports. The observer would 
be met by a in ail the principal ports 
at ship called. He would report any suspicious events 
he had on the voyage, Nazi or Communist talk among 
the of possible Axis agents among 
or crew, radio sent out after a British ship 
had German supply vessels or raiders 
and The would be despatched at once 
to in New York for action. In some cases the ship- 

assistance^ because the scheme 

the security of their and they also knew that 

cooperation facilitated the of their ships through 

By May, 1941, there were 145 such 

in on regular Atlantic, Caribbean and 

Many of the were of their vessels^ and they 

which extended beyond 

the of with which they were primarily con- 

The of Portuguese steamer, for instance,, 

at mall from unsuspecting passengers. 

*We be by a British cruiser' ^ he would 

over the public system, *so anyone with 

for safe it in to the Captain's office to 

its by the British." On one voyage ao less than 

information, were obtained in 
this way and over to Stephenson's New 



York office for examination sent oe of the 

Vichy French agent Musa's were in this way 

and used by Stephenson in his campaign Vichy's under 

cover activities in the United States. Another observer, on 

board a Spanish vessel, succeeded in 

the sealed sailing orders which had to the 

of all Spanish ships by the Chief of the Naval Staff In 

Madrid and were to be opened only in the of Spain 

to war. These elaborately orders 

photographed, the seals replaced apparently and the 

documents replaced without the of the or 

anyone else on board except the ship's observer. 

Many of Stephenson's observers to 

events in neutral and enemy countries which 
They were employed to spread rumours and anti- 

Axis propaganda literature. They on 

seamen suspected of carrying contraband or 
from one port of call to another for Axis Thus the 

reports regularly furnished by the ships* a 

complete list of suspect seamen to be in 

office. The list was made available to 
in the United States and resulted in 
being paid off and not signed on by the 

Since it involved the use of agents by the British in U.S. 
and U.S. ships, the Ships Observer Scheme a 

cause of friction with the American authorities. Eventually, 
towards the end of 1941, Stephenson to the 

operation of the scheme, so far as United 

vessels and ports, to the U.S. Office of Naval 
while retaining the observers on neutral at 

American ports. This arrangement for the 

of the information gained and on the 
factorily for the remainder of the war. 

Brazil and Venezuela were the 
sources of industrial diamonds^ in the 
and machine tool industries. In 1943^ in 

Rio caused the arrest of a large 
although its members were subsequently OE 

of stiff penalties to the Brazilian the 

caused a sharp fall ia the price of 



132 

and did to the business. But it could never be 

completely controlled,, In Venezuela It likewise flourished, but 

not to the as In Brazil owing to the more 

of the Venezuelan police and customs. 

There the by Stephenson's agent in 

on occasion, when he flew In advance of a 

travelling by sea to Trinidad^ resulted in the 

in that diamonds to the value of 

and Information which Implicated the 

In Caracas la the diamond smuggling racket 

to an his government was obliged to withdraw 

him at the of the Venezuelan authorities. 

never out on such a large scale as the 

of platinum was very much the most 

Involved in these activities, since 

It for magnetos and other 

to rely on the mines In Colombia 

and the Russian supply had been cut off follow 

ing Hitler's of the Soviet Union la June, 1941. 

of the commodity were carried on the 
LJLTX and not be prevented until the 

as will be was down as the result 

of Otherwise platinum was carried by sea 

AireSj Rio and Caracas to Lisbon where 
30 an (later rising to ^80) for it as 

the price of g in the United States. Here 

Is a agent In Buenos Aires: 

Our on s.s. fife reports Muricia 

considerable quantity of platinum In 

his . . . Metal In of biscuits hidden Inside panelling 

at of Aldecoa's bunk, 

A few reached New York to the 

the had removed by the would-be 

in barrels of manzaniila wine In 

the The stated to have been 

stored In the of the of the ship's 

la Aires, 

Action always on such as this. Sometimes 

It not. platinum and 



diamonds,, the principal articles were 

which were used by New York as 

Schiaparelli. Determined were by 

passengers from Lisbon to get the 

On one occasion^ due to prior a 

Vichy Frenchman named Pierre by 

the security control at Bermuda 750 

grammes in his possession. The New 

suggested that Massin was carrying more, but 

he strongly denied suggestion^ to his of 

Honour ribbon in his coat declaring: *1 my 

as a French officer that is all I with me. 5 a 

rigorous search of his cabin and 

three canisters each containing 750 in a 

of golf clubSj and six more in a his 

Other suspicious articles were 

stamps and butterfly trays. The latter, in 

Brazilj provided a constant for the 

with their brightly coloured butterflies' in 

variegated patterns underneath the of the 

Germans bought them in vast but 

son, nor for that matter was to 

whether their interest in them or 

On several occasions were to be 

trays 5 and one of 

he had seen some women employees in the in 

Rio taking the trays to and 

Thus it as if they were as a of 

communicating 

after many trays in 

reached London and 

But nothing of any the 

of the butterfly trays to this 

Ultimately the problem of the 

problem of and in the run had to be 

by one and the The as 

to obtain as to 

strategic materials, in to 

they 

by the the 



J 34 

States had entered the war and all the principal Latin American 

Argentina and Chile had either declared war 

the Axis powers or broken off diplomatic and 

with them, Stephenson's organization 

to co-ordinate all the information on the subject both 

American and sources through regular shipping 

of all Argentinian traffic. The final result 

be to London, Aires and any other 

stations,, so that the ships reached Trinidad a 

be as to their interception, search and 

of suspect passengers and crews. 

This proved so effective that by the middle of 1944 there 

was no much chance of smuggled goods reaching 

Germanv America. 1 



The of Stephenson*s organization 

in 1941 with particular reference to Latin 
America, At every American republic was neutral in 

the war the powers., who were seeking to extend their 
by every in that part of the hemisphere. In 

1941, Martin Dies, chairman, of the House 

which appointed s to investigate un- 

American activities', Germany had about one 

in South America 'organized in 
battalions*. The danger of a German invasion 
of not be ignored. Already^ in June, 

a in Uruguay, headed by a 

Arnulf Fuhrmaim, to take over the 
in to a thousand Combatants 5 

for Futinnann had pre- 

he the outline plan of Ms projected 

as a but the Uruguayan authorities paid no atten 

tion to this Mm up. The American 

of the details, had immediately 

^unless the United States 

there was genuine danger 

Uruguay fal under Nazi domina- 

1 Further will be in Medlicott, II, 160-9, 4 2 7~35- 



'35 

tlon 5 . 1 The President did not feel that he could any 

warships to patrol the coast as the Ambassador would have 
liked, but he did empower Edgar Hoover and the F.BJ. to 
organize a secret Intelligence service la Latin America to be 
responsible for the collection of all non-military 
in other words counter-espionage. In this work, in 

its initial stages, Hoover's by 

Stephenson's agents, and the two 
together most harmoniously In the field? 

The F.B.L had no authority to la operations', 

so that in this sphere Stephenson 
other devices which he created at a 

ment within the framework of his for the 

purpose of fabricating letters It a 

laboratory In Canada which was set up, the aid of the 

R.C.M.P., under cover of the Canadian 
tlon, whose general manager at 

old friend Gladstone Murray. It by or 

experts and was called Station M. This 
suggested by the first letter of the of the 

played a leading part In the station's This 

was Eric Maschwitz,, better as a lyric writer ^The 

Nightingale sang In Berkeley Square 5 ) the of 

several successful musical 

'The operations with which I was a 

known as "Little Bill" were many curious', has 

written In Ms autobiography, briefly and to 

this strange Interlude In his *ln ! 

associated with . . . an 
who could reproduce the 

on earth. I controlled a In one a 

photographic studio In another. My me to 

Brazil and Bermuda. . ,* 3 

For the fabrication M 

facilities In the form of and a 

certain amount of 

1 E)e Jong. 112, 118. Fuhrmann and five of his recehed 

ranging from ive to twelve 
1 Whitchead, iBi~a, 189. 
s Eric Maschwitz, M0 cw Afv ^57/ PP- J 44*5- 



136 

from a variety of sources; and lastly, planned Inventive- 

had to be on a sound appraisal of political 

In the various areas. In helping to fulfil these 

the censorship stations rendered 

service, particularly Bermuda, They agreed to unseal 

and of transit In order to insert suitable propa- 

matter. They relevant raw material as 

and the carried by on ships and 

had impounded by the Travellers 5 Censor- 

They of the epistolary paraphernalia 

by departments^ banks and other official and 

In various countries, such as writing-paper 

sad and also of private stationery 

be for of reproduction. And they 

on individuals whom they considered possible 

for or incrimination. 

For 'Anna* and posted in 

Chile, the evidence which caused a Nazi 

to to death a notorious Czech traitor 

In German-occupied Czechoslovakia. In 

and were nicely blended. They 

the man's private life which he was 

to deny ? as the "strange death of your brother Jan* 

to Ms wife who was half-Jewish. On the 

palpably Incriminating statements 

he was to explain Indeed they were genuinely 

to such as 1 looked after the marks 

but do the zlotys', "Father caught 75 fish on 

the 1 7th, was not well but caught 82' and 

*I was a In which I to use 14 skeins 

of 60 feet two were only 28 feet'. 

The who the letters In the first in- 

the writer obviously attempting to com- 

the In code and that he was 

an This he emphatically denied, but 

the against Mm. He had no idea 

was, he said. But he could not argue away the clear 

he IE regular communication with her. How 

else she be with the of his private life? Nor 

lie any and convincing explanation of the 



137 

frequent references to numerals. It only remains to add that the 
Germans were not at all favourably by his 

ported protestations of innocenceeven in the torture 
They executed Mm, and in so doing lost a 

Station M worked on the principle that its output be 

good enough to defy the most microscopic and 

chemical tests. Thus it produced no document which was not 
an exact imitation down to the of it 

purported to be. The necessary technical 
by a panel of experts 5 whose services were for the 
given free. Among them were Canada's on 

the manufacture of special inks and paper. 

In the field of political warfare Station M a 

writing campaign which was to and des 

pondency in enemy circles. The letters were the 

were recruited individually among enemy or 
opposed to the Axis and they did not know they 
tributing to a general scheme. They to 

regularly with friends and business in 

Europe, and to include in their letters (pre 

pared by Station M), which revealed lack of in the 
cause but was not so obviously in as to like 

deliberate propaganda. Risk of was 

to a minimum. Letters were often purposely to 
were known to have died and to 

down. So long as the subversive material by 

the enemy censors and other it its 

On the assumption that the Nazis were 
writing propaganda of their own, a to 

discredit information coining Germany. It 

been easy to apprise friendly la the 

States of the available evidence. But 
that this would be inadequate he 
more substantial should be fabricated* The 
entrusted to Station M, For example, the 
Walter Winchell received a letter in 

Lisbon by an American 

during a voyage from Hamburg to he by 

a Jewish refugee that all approved in 

with abroad were a of by Dr. 



13* 



to be Included In their letters 

to To this story the sailor 

a slip which he told Winchell had been 

by the German In another letter which 

to the because it had not included 

the and also a copy of the current bulletin In 

Issued In Hamburg^ 
It was a fine for Winchell and his twenty-five million 

he nor had ever heard of Station M. 
was the Vik which had been invented 

by an who was a sabotage and 'resist 

ance' the First War. Described as *a fascinating 

new for all of democracy', Its purpose was to 

and Fascist sympathizers In neutral countries to 
with the object of wasting their 
fraying their nerves and getting 
with the local population. Vik was launched 
by of and anonymously printed booklets In 

and Portuguese, which were the pro- 

M and distributed with the greatest secrecy 

by throughout South America. Allied 

to themselves Into teams and 

to one by scoring points for every annoy- 

or to the Nazis and their confeder- 

*From this It will be that a skilfully played game of Vik 

can be not only a of great amusement to the players but 

also a real and contribution to the Democratic Cause 9 , 

to the Instructions. ^Remember that 

our arc to ridicule!" 

arc of the petty persecutions which Station M 

A Nazi be telephoned at all hours of the 

and be apologetically assured that 

It the the air could be made to disappear 

Ms tyres; could be telephoned 

on' Ms to deliver quantities of useless and 

goodspayment on delivery; masses of futile 

without stamps so that he was 

to pay out of money; his girl 

letters saying that he was 

an or that he was keeping a 



woman and six children In Detroit; he be 

ently genuine Instructions to 

journeys; a rat might die la his water-tank; Ms 

might get lost; and street be to 

Corf Save the King outside Ms all With a 

thought, Station M advised. It be to at 

least five hundred ways of a the 

persecutor compromising the 

Instructions concluded, that in Vik arc In 

own small way acting as a of the of 

Democracy. Therefore be silent. 

This campaign of ridicule by the 

tlon and surreptitious distribution of 
attacking certain named Nazis. A the 

concerning Werner Von Levetzow, of Sn the 

German Embassy in Rio, who as 

the next German Ambassador to He a tail 

German, half-Danish c superman* a 

Krupp heiress shortly after the of 

left him not long after in he 

was impotent. Naturally he the of in 

society on Ms lack of virility, M 

them to considerable advantage. the 

warned male Brazilians* 'This this is 

of robbing you of your money, your 
country, but NEVER of your . . . HE CANNOT/ 

After the majority of Latin had 

entered the war on the or 

with the Axis the 

in January^ 1942, Station M"s as a was 

reduced, the 

it major to its in the 

of which in the of the 

LJLTX In thus the gap in the 

blockade, 



5 

In May, 1941, a 

Hoover for IB a In 



which the F.B.L was precluded from operating by the terms of 

Its directive. The message was to the effect that 

Major Belmonte, the violently pro-Nazi Bolivian Military 

Attache in Berlin, in touch with Nazi elements in Bolivia 

to be planning a with the object of over- 

the pro-British Bolivian Government of 

President Penaranda establishing a pro-Axis military 

dictatorship. Hoover that President Roosevelt was most 

evidence confirming this report should be obtained 

and put his as quickly as possible. The President's 

anxiety may have to the fact that Bolivia was the 

of supply for the United States of wolfram^ the 

ore which the ferro-alloy tungsten was derived for use in 

manufacture,, and he may have feared that such 

a the flow of this essential commodity to 

immediately off one of Ms agents to Bolivia 

to plan a counter-offensive. This agent happened 

to be the writer, so that he can speak with first-hand 

of events. As a matter of courtesy and 

as a in the agent should become em- 

with the local authorities the British 

in the various territories which Stephenson's emissary 

to were officially informed of his visit, though not 

of its purpose* For reason^ possibly due to bad 

weather, tic to spend twenty-four hours in Peru, 

the British Minister to invite him to 

On arrival at the Minister's house in a suburb of Lima, 

the he by no means the only guest, 

the lunch party a large mixed one, consisting 

of Peruvian gentlemen and their wives. 

Unfortunately, the Minister neither so tactful nor so dis- 

as Ms in La Paz. (After his retirement on 

he a well-known firm of turf accountants in 

the only former diplomat of the British foreign 

to so.) No was the assembled 

at His Britannic Majesty's reprc- 

to the writer and addressed him in 

which the dining-room: *So you've 

down here to do a secret-service job s have you?* 



1,4! 

The unfortunate individual to whom this qu^tion was 
directed did Ms best to It off, But the uncomfortable 

impression remained that it would be news in the German 
Legation by tea-time^ so he was relieved when he got on 
his way next morning without and was flyintr over the 

Andes to the remote Bolivian beyond Lake Titicaca. 

The news he was able to in La Paz the 

original report. It appeared that Major in Berlin had 

been corresponding with the Bolivian Chief of Staff and hinting 
at a possible coup\ also that the Government had got wind d* 
this and was seriously concerned that Bclmontt- and his Nazi 
friends might attempt to bring off the cmp under the- cuisr of 
a military revolt. He further that the for the 

revolution were expected to be from Brrlifi in <t 

German diplomatic bag consigned in of a courier to the 

German Legation in La Paz. Chance put him in a 

Bolivian who claimed to of Brfmnn!*''^ 

project, and having collected all the information he rouM 
from this source and certain h* 

returned to New York and reported the of his Journey 

to Stephenson. 

Meanwhile, as a precaution^ one of 

his agents in Brazil instructing him to out for any 

courier carrying a German diplomatic bag which was believed 
to contain 'incriminating documents of the importance', 

and arriving at Recife by the Italian airline L.A.T.I. and 
on to La Paz, The agent was told to of the 

documents or s if the courier in his 

attentions, to report his movements so 
could be taken elsewhere. In the 

that a German named Fritz 

representing the German Potash left by air 

for Buenos Aires whence it was he to go on to 

Bolivia. Contact was established with his secretary 

for a monetary consideration Stepheason's with 

particulars about Fenthol his 
to her he was carrying a letter to ifar 

Minister in La Paz. Shortly afterwards the F.B.I, repre 

sentative informed Ms lie understood a 

British agent had to Fenthol of a idler while 



142 

he to him in an overcrowded lift in the German Bank 

in Buenos Aires, 
At the of July, Stephcnson informed London that 

the United States authorities were aware that some document 

had intercepted and were anxiety that no 

be lost in it on to them If of Interest', 

for the full text of the document 

was 'most urgently required by the highest authorities*. 

This was followed' up a few days later by another message to 

the effect that the Bolivian Government should be warned as 

as possible so that it might suppress the coup 4 If and when 

it place' and suggesting that the matter should be 

discussed frankly with the Americans who should be left to take 

if they so wished. /In any absolutely essential that 

should be conveyed with possible delay.') 

the letter to Hoover, who was 

as as he was to receive it. Hoover at once 

It to of Cordell Hull, and Hull lost no 

in a copy to the Bolivian Government^ 

he shown it to President Roosevelt. 

The letter, typewritten in Spanish and bearing what was 

was dated June g s 19415 from 

the Bolivian Legation in Berlin, addressed to Dr. Ernst 

Wcndler, the German Minister to Bolivia. 'Friends In the 

tell me that from Information received from 

you, 1 so ran the letter^ "the moment is approaching to strike In 

to my country a weak government and 

completely tendencies. I go much further and 

the (el should take place in the 

of July I the moment to be propitious.' 

and Cruz were to be the focal points of the 

rising, they were centres which were *most 

to m" and 'have prepared coEdltioES and have 

our with and energy*. The writer went 

on to he of his friends that meetings 

were without molested by the authorities 

and 'nightly place. ('Further, I see 

of bicycles have collected which will 

our by motor cars and trucks 

arc too noisy/j The writer also the plans for his 



arrival by air to over with the of the younger elements 
in the army. ('Actually 1 have upon and 

it will be they, without who will give me the 

co-operation In the Important work we are carrying out 

In my country/) The keynote was rapidity of action. The letter 
continued: 

^ We must rescind the wolfram contract with the United 
States, and substantially modify the tin contracts with 

England and the United States, The handing over of our 
airlines to the Interests of Wall Street is treason to our 
country. . . . Since my short time in the government strike 
I have been fighting this. Why over '"the country to the 

United States on the pretext of financial aid which vJll nrver 
come? This Irritates me! The United mill follow 

age-long policy: to obtain IB exchange for 

small loans, and even we are not to 

administer. Bolivia not With the 

triumph of the Reich, Bolivia work and We 

must copy, on a the of 

Germany since National info power. . . . 

I hope that the last word will be my flight to 

complete the work which will in the first place, 

and afterwards the South American from 

North American Influence. The will 

follow our example, and with one sole and out sole 

supreme leader^ we will the future of South and 

will begin an era of purification, work, 

The repercussions, this 

reached La Paz s were On July 19, the 

proclaimed a the to 

round up Nazi At the Dr. 

Wcndler, the German Minister, r 

ordered to leave the country. A of 

Germans civilians, the 

of the 

by the of the 

were arrested. Four 

the 

the Incriminating was 

struck off the Army List. The 

the on the as to the 

Military Attache* 



144 

As a reprisal the Bolivian Charge d 3 Affaires in Berlin was 
given seventy-two hours to leave Germany. Two days later, in 

Washington, Sumner Welles, Acting Secretary of State in Hull's 
absence, announced that the American Government had assured 
Bolivia of full assistance if her expulsions of the German Min 
ister resulted in c an international incident* and had informed 
the Government in La Paz that Dr. Wendler would not be 
permitted to enter the United States. 1 

That the Germans were engaged in subversive activities in 
Bolivia at this time there can be no doubt, although the precise 
extent to which Major Belmonte was involved in them must 
remain a matter of conjecture. Two-and-a-half years later the 
Germans got their own back in some measure when they helped 
to engineer the military revolution which overthrew President 
Pefiaranda and his Government on December 20, 1943, and 
installed Major Gualberto Villarroel as President, in spite 
of the fact that the new Bolivian Government remained 
aligned with the Allies in consequence of United States 
pressure. 2 

However unorthodox the methods by which the Belmonte 
letter was obtained, the operation must be judged by its 
results. It probably averted a revolution, it certainly caused the 
expulsion of the German Minister and the arrest of a number of 
dangerous men and it prepared the climate for the Pan-American 
conference at Rio six months later when Bolivia and eighteen 
other Latin American states broke with the Axis powers and 
banded themselves together in a common scheme of hemisphere 
defence *the decision that saved New World unity', as Sumner 
Welles called it. 3 



The next major operation carried out by Stephenson in South 
America resulted in the closing down of the L.A.TJ. airline. 
During the earlier part of the war, Brazil was the terminus 
for one of the most important Axis channels of communication 
with the American continent. The Italian L.A.T.I. planes, 

1 New Tork Times, July 20, 21, 22, 24, 1941. 
Hull. II, 1388. 

* Welles, 101. 



145 

which flew regularly between Europe and Brazil, carried 
German and Italian diplomatic bags, couriers, agents, dia 
monds, platinum, mica, chemicals and propaganda films and 
books. The Brazilian Government had no desire to obstruct the 
service. One of the Brazilian President's sons-in-law was the 
chief technical director of the line, and there were many other 
powerful Brazilians who had an interest in preserving its land 
ing rights. In spite of the protests of the U.S. State Department, 
an American oil company supplied L.A.T.I. with fuel. 
L.A.T.L constituted the biggest gap in the British economic 
blockade. Consequently the Special Operations Executive 
(S.O.E.) in London was anxious that something drastic should 
be done about it, and Stephenson was instructed accordingly. 

The plan which he and his S.O. advisers devised in New 
York was to convey to the Brazilian Government a compro 
mising letter which purported to have been written by someone 
in authority in the L.A.T.L head office in Italy to an Italian 
executive of the company in Brazil and which would result in 
the cancellation of the company's concession to operate its 
transatlantic route. Stephenson's agents in Brazil immediately 
got to work and after some weeks they succeeded in obtaining a 
genuine letter which had been written by the L.A.T.L president 
General Aurelio Liotta from the company's Rome headquarters. 
In forwarding it to New York, they suggested that the fabricated 
letter should be addresed to the airline's general manager in 
Brazil, Commandante Vicenzo Coppola. 

The experts in Station M were able to simulate exactly the 
style of writing paper, the engraved letter-head and the form of 
type used by General Liotta. Fortunately Station M had been 
able to secure the small amount of straw pulp paper that was 
available in North America and was an essential requirement 
in the proposed operation. The embossing was copied with 
microscopic accuracy, and a typewriter was rebuilt to conform 
to the exact mechanical imperfections of the machine upon 
which the General's secretary had typed the original letter. 

The deception letter was then composed in Italian, micro- 
photographed and the microfilm sent to Stephenson's chief 
agent in Rio. It was dated October 30^ 1941, from the Rome 
head office of L.A.T.I. 'There can be no doubt that the fat little 
man (il grassodo) is falling into the pocket of the Americans 5 , 



146 

General Llotta was supposed to have written, 'and that only 
violent action on the part of our green friends can save the 
country. Our Berlin collaborators , following their recent con 
versation with the representative in Lisbon, have decided to 
intervene as soon as possible. 5 As this might result in a new 
concession being granted to the German airline Lufthansa, 
Gommandante Coppola was urged to take immediate steps to 
make new friends among 'the green gentlemen' and do his best to 
see that all LJV.T.L's existing privileges were guaranteed under 
the new regime. ('Discover whom they would propose to nom 
inate as Minister for Air and make the best dispositions possible/) 
The Commandante was enjoined to exercise the utmost dis 
cretion. The Brazilians may be, as you have said, a nation 
of monkeys (una nations di sdmmie}\ the letter concluded, 'but 
they are monkeys who will dance for anyone who will pull the 
string. 5 

The *fat little man' was of course easily recognizable as the 
Brazilian President Getulio Vargas, while the 'green gentlemen' 
were the Integralists, the political party opposed to Vargas, 
against whom they had already attempted a revolution with 
German help. As far as the President himself was concerned, 
the letter contained personal insult, abuse of his country, scorn of 
his foreign policy and suggested encouragement of his political 
enemies. Those who expected that this combination would 
cause the President to react vigorously were not disappointed. 

Immediately after he had received the microfilm of the 
letter, Stephenson's man in Rio arranged for a burglary to take 
place in Commandante Coppola's house, at which a bedside 
clock and other articles were stolen. Coppola called in the police, 
and the affair received some publicity, which was what the 
British agent intended, as he wished it to become generally 
known that there had been such a burglary. Next, a sub-agent, 
who was a Brazilian, approached a reporter of the American 
news agency Associated Press and, after pledging him to the 
strictest secrecy, told him that he had taken part in the burglary 
of Coppola's house. He then went on to say that he had found 
something that looked interesting and proceeded to show the 
reporter a micro-photograph which he said he had found among 
the Commandante's belongings. When he saw that it was 
apparently a miniature reproduction of a letter from the 



President of L. A.T.I, and had noted its contents, the A.P. man 
came to the conclusion that the original had been considered 
too dangerous to entrust to the ordinary air mail and that it had 
been smuggled into the country in this form to prevent possible 
interception. He immediately took it to the American Embassy 
and showed it to the Ambassador, who ordered some enlarge 
ments to be made. When he had examined these, he decided 
that the letterwhich had been micro-photographed was genuine, 
and he forthwith turned over the film and enlargements to 
President Vargas. 

The infuriated President reacted exactly as Stephenson had 
hoped and surmised that he would. He immediately cancelled 
all L.A.T.I.'s landing rights in the country and ordered the 
arrest of the general manager of the line. The Commandante 
attempted to flee the country, having previously drawn one 
million dollars from the bank, but he was caught while attempt 
ing to cross the Argentinian frontier. He was later sentenced to 
seven years' imprisonment and his funds confiscated, while 
L.A.T.I. was fined $85,000 for infringing Brazilian law. Their 
aircraft and landing fields and all their maintenance equipment 
were likewise taken over by the Brazilian authorities and the 
crews and other Italian personnel were interned. 

A few weeks later, when Brazil broke off relations with the 
Axis, the view was expressed in the U.S. Embassy in Rio that 
General Liotta's letter had been 'one of the main factors in 
persuading President Vargas to turn a'gainst the enemy'. The 
letter itself was not published, no doubt because of the insulting 
remarks it contained. But the Americans generously decided 
to share the secret with the British intelligence representative 
who worked in the British Embassy. A member of the American 
diplomatic staff accordingly produced a copy of the letter 
which he assured the Englishman had been 'pinched* by U.S. 
Intelligence. Stephenson's agent expressed fervent interest and 
admiration and warmly congratulated his colleague on Ms 
work. 

Brazil's break with the Axis, which occurred during the Rio 
Conference, was of the greatest importance to the Allies, 
particularly the United States. Under a policy of strict 
neutrality Brazil could not have offered the use of her ports as 
she did to the U.S. South Atlantic Fleet as bases for patrolling 



148 

the area. Another result was that the United States was 
permitted to build airfields in northern Brazil, which were 
essential for the transport of troops to Africa and the Medi 
terranean. Without these airfields the invasion of Algeria and 
Morocco could not have taken place in IQ42. 1 

Of all the Latin American states the Germans were most 
strongly entrenched in Argentina, where if was estimated that 
there was upwards of a quarter of a million people of German 
descent besides 50,000 German nationals. 2 From this it might 
be supposed that Argentina presented extensive opportunities 
for 'special operations'. But this was not so, largely for political 
reasons. Pro-British feeling among the masses was combined 
with anti-Yankee sentiment, while the army was to a great 
extent pro-German as to some extent was the Government. 
Also, in spite of repeated prodding from Stephenson and other 
British official representatives as well as State Department, the 
Foreign Office ia London kept delaying an announcement 
condemning Argentina's pro-Axis policies. Economics were also 
involved, since Britain's meagre civilian meat ration depended 
upon Argentine shipments of beef. Indeed the question of 
Argentina provided one of the biggest stumbling blocks in 
Anglo-American relations during the war. While Cordell Hull 
referred contemptuously to the 'petty commercial advantages 
of a long-term bargain with a fascist Government 5 , a Foreign 
Office spokesman described the operation, of dealing with the 
Secretary of State as like attempting to deal with Mr. Gladstone 
in his old age. 3 (Hull prided himself on being a Gladstonian 
Liberal.) 

For these reasons the actions of Stephenson's agents in the 
Argentine were mainly confined to the combating of smuggling 
and the dissemination of propaganda. However, they did 
succeed in intercepting one remarkable piece of German 
intelligence which concerned Hitler's post-war plans for Latin 
America. This was a secret airlines map of the future showing 
how the sub-continent was to be divided and its territories 
redistributed between Argentina, Chile, Brazil, a new state 
called New Spain (consisting of Colombia, Ecuador, Venezuela 

1 Welles, 224. 

2 Dejong, 225. 

8 Woodward, 417. 



and Panama, Including the Canal Zone), and a colony com 
prising British, Dutch and French Guiana to be ruled by the 
France of Laval. The entire area was covered by a compre 
hensive airline network with a transatlantic terminal at Natal. 



LUFTVERKEHRSNETZ, 

MM 

VCREIN1GTEN STAATEM 
SUD-AMERIK&2 
JHAUPTLINIEN 




Nazi map of South America, purloined from a German courier 

Handwritten notes in German referred to 'fuel reserves for 

transatlantic fuel' and the possibility of Mexican participation 
in the supply of fuel. 

The map was purloined from a courier of the German 



150 

Embassy in Rio, when he met with an accident and his despatch 
case disappeared. As soon as he received it in New York, 
Stephenson gave it to General Donovan, who had -by this date 
become Co-ordinator of Information, and Donovan passed it on 
to President Roosevelt. The President was greatly impressed 
and brought it into a speech which he made at a Navy Day 
dinner in Washington on October 27, 1941, and which was 
broadcast to the nation. "Hitler has often protested that his 
plans for conquest do not extend beyond the Atlantic Ocean 3 , 
the President declared. e l have in my possession a secret map, 
made in Germany by Hitler's Government by planners of the 
new world order. It is a map of South America and part of 
Central America as Hitler proposes to organize it. Today in 
this area there are fourteen separate countries. The geographical 
experts of Berlin, however, have ruthlessly obliterated all the 
existing boundary lines and have divided South America into 
five vassal States bringing the whole continent under their 
domination. And they have also so arranged it that the 
territory of one of these new puppet States includes the Republic 
of Panama and our great life-line, the Panama Canal. This 
map makes clear the Nazi design, not only against South 
America but against the United States itself.' 1 

A few weeks later, one of Stephenson's sources in touch with 
the German Embassy in Buenos Aires reported that after the 
President's speech Hitler had asked the Ambassador, Freiherr 
Edmund Von Thermann, for an explanation of the leakage. 
Apparently there were only two copies of the map. One was in 
the Fuehrer's safe; the other was with Von Thermann. A fierce 
inquisition took place inside the Embassy and eventually the 
blame was attributed to a former Civil Attache and Nazi Party 
leader named Gottfried Sandstede. He was accused of having 
allowed the map to be copied. 

The discovery of the map was convincing proof of Germany's 
intentions in Latin America and came as a considerable shock 
to all good citizens of the United States. Well might the 
President say, Ve have taken our battle stations 9 . 

1 The Times. October 29, 1941. 



CHAPTER VI 



C.O.I. AND O.S.S. 



UNTIL within a few months of Pearl Harbour^ there was no 
domestic organization comparable with Stephenson's in the 
United States. The Army and Navy Departments had their 
own separate intelligence branches, while the F.B.I. was 
responsible for the collection of, and where necessary taking 
action upon, counter-espionage information. But until the 
middle of 1941 there was no body like B.S.C. which was 
engaged in co-ordinating and evaluating secret Intelligence and 
planning propaganda and 'special operations' overseas' which 
could be put Into immediate execution should the United 
States become Involved in the war. Stephenson frequently 
reverted to this theme during the early days of his association 
with Colonel Donovan; and, as already Indicated, he made 
arrangements for Donovan to see everything he wished relating 
both to S.I. and S.O. activities during his visits to England. 
Indeed during Ms second visit on which Stephenson accom 
panied him as far as London at the end of 1940, Donovan had 
been shown the various S.O. stations In England by Air 
Commodore Sir Frank Nelson, an experienced business maa 
and capable organizer, whom Dr. Dalton had appointed as the 
first chief of the Special Operations Executive (S.O.E.). 1 At 
this time, and indeed throughout the war, the propaganda 
division (S.O.i) later to be known as the Political Warfare 
Executive (P.W.E.) operated from Woburn Abbey, the 
Duke of Bedford's country house in Bedfordshire, while the 
physically offensive special operations staff (S.O.2) had their 
headquarters in an Inconspicuous office In Baker Street, 

1 Sir Frank Nelson was succeeded as head of S.O.E. by Sir Charles 
Hambro, and later by Major-General Sir CpHn Gubblns, who had previously 
been in charge of operations and training in S.O.E. 

151 



152 

London, which was to become widely known, at least by 
name. (*Qu*est-ce qu c*est y cette Baker Street?', one Frenchman 
was overheard asking another in a Paris cafe just after the 
liberation.) 

When Donovan returned from his tour of the Middle East 
and the Balkans in April, 1941? and reported at the White 
House, President Roosevelt began to give serious consideration 
to the question, for by then Lend-Lease had begun to function 
and Congress was becoming accustomed to the idea of inter 
vention on Britain's side on an increasing scale. At the beginning 
of May, 1941, Stephenson cabled London that he had been 
'attempting to persuade Donovan into accepting the job of 
co-ordinating all U.S. intelligence 5 . To this end he enlisted the 
help of various individuals whom he knew to have influence 
with the White House, notably the playwright Robert Sher 
wood, who wrote many of the President's speeches, and the 
sympathetic and pro-British John Winant, who had succeeded 
the defeatist Joseph Kennedy as United States Ambassador in 
London early in 1941. At the same time, he had to create a 
favourable climate of opinion in London where, although 
Donovan had made an excellent impression during his visits, 
there was some reluctance on the part of some of the older 
intelligence departments to his being provided with secret 
information of the kind with which Stephenson was already 
beginning to feed him, so that Donovan could pass it on to the 
President and further stress the need for establishing under 
cover services in the United States like Stephenson's own. 'At 
one point 5 , Stephenson later admitted in characteristic language 
to one of Donovan's close friends and wartime associates, e it 
became necessary to enlist the support of the great man at the 
top (Churchill) who fortunately for me, always saw eye-to-eye 
with me on all matters relating to British-American exchanges, 
and in his immediate entourage were some who kept an eagle 
eye on any suggestion of deviation from the great man's orders 
in relation to our friend Donovan by the departments concerned, 
General Ismay was one and Desmond Morton was another. 
Nonetheless, had it been comprehended in that building with 
which you are familiar (S.I.S. headquarters) to what extent I 
was supplying our friend with secret information to build up 
his candidacy for the position I wanted to see him achieve here, 



there would have been such a cold blast of horror sweep 
through it that on your first visit to it you would have had to 
find your way over one corpse after another!' 

The idea that he himself should direct the new agency that 
Stephenson envisaged did not at first appeal to Donovan, nor 
was It by any means a foregone conclusion that he would be 
offered the appointment. Yet from Stephenson's point of view 
he was obviously the man for the job. In the first place, he had 
the confidence of the President, of the Secretary of State and of 
the heads of the Service departments. Secondly, he had made 
some study of, and had given considerable thought to 5 the 
conduct of secret activities. Thirdly, he had all the requisite 
vision, energy and drive to build swiftly an organization of 
sufficient size and importance ultimately to play an effective 
part in the war. Lastly, he had shown himself willing to 
co-operate fully with Stephenson and his B.S.G., and the value 
of his co-operation, as has already been seen, had been 
abundantly proved. But no decision was made for some time, 
despite what Stephenson called Various pressures* being 
brought to bear in the White House. 

Eventually, on June 18, 1941, Donovan was received by the 
President and after a long discussion agreed to accept the office 
of Co-ordinator of Information (C.O.I.), his duties to Include 
the collection of all forms of Intelligence and the planning 
of various covert offensive operations. He was to hold the 
rank of Major-Genera! and to be responsible only to the 
President. 

In telegraphing this news to London on the same day, 
Stephenson remarked that Donovan had accused Mm of having 
'intrigued and driven' him into the job. 'You can imagine how 
relieved I am after three months of battle and jockeying for 
position in Washington', Stephenson added, 'that our man is In 
a position of such importance to our efforts. 5 

Donovan's appointment as head of C.O.I, was formally 
announced by Presidential executive order on July n, 1941. 
His duties were defined as follows: 

To collect and analyse all information and data which may 
bear upon national security, to correlate such information and 
data, and make the same available to the President and to 
such departments and officials "of the Government as the 



154 

President may determine, and to carry out when requested by 
the President such supplementary activities as may facilitate 

the securing of information important for national security not 

now available to the Government, 

This directive was necessarily vague in its terminology, since 
the President obviously could not be specific about the functions 
of an agency which had been created to undertake work both 
secret and potentially offensive in character. But, in fact, 
Donovan had been entrusted with responsibility not only 
for collecting intelligence but for co-ordinating this product 
with preparations to conduct 'special operations 5 and sub 
versive propaganda. Thus C.O.L was in effect, if not in 
name, the American counterpart of B.S.C.', Stephenson 
later recalled, 'and that night I took five instead of four 
hours 5 sleep.' 

Collaboration began at once. Together Donovan and 
Stephenson drew up the initial plans for his agency, both as 
regards establishment and methods of operation. On August 9, 
1941, Stephenson informed London that Donovan's organiza 
tion was rapidly taking shape, that central offices in Washing 
ton had been established with a nucleus of staff and were 
functioning, and that understanding with the Chiefs of Staff 
seemed satisfactory and that Donovan felt confident of their 
co-operation. ('He now has several competent assistants who 
seem to know their job and have a practical outlook. 5 ) His two 
mainstays among his small original staff were Colonel Edward 
Buxton, a news publisher from Providence, R.I., and a friend 
from First World War days he had helped with Donovan to 
found the American Legion in 1919 and James Murphy, who 
had been his law clerk when Donovan was Assistant Attorney 
General. Ned Buxton became the chief executive officer of 
C.O.I., while Jimmy Murphy took charge of the counter 
espionage side, although Murphy used to say with a cheerful 
grin that the real reason why Donovan had brought him into 
the new organization was e to keep the knives out of his back 9 . 
The other prominent recruit to C.O.L in the early days was 
Robert Sherwood, the playwright and friend of President 
Roosevelt, who was made responsible for propaganda to foreign 
countries, although (as will be seen) he did not remain through 
out with Donovan. To secure the closest possible day-to-day 



liaison between B.S.C. and C.O.I., Stephenson set up a branch 

office in Washington to which he attached experienced officers 
in all branches of secret activity, and Donovan in turn estab 
lished a branch office in New York. ( c He now has working 
apparatus here and in Washington and should be able to safe 
guard secret documents.') 

The establishment of C.O.I, five months before Pearl 
Harbour represented more the promise than the fact of Ameri 
can participation in secret activities abroad 5 , Stephenson has 
recalled. 'From my point of view C.O.I, was essentially a long- 
term investment and for some time it required more help than 
it could give in return. This was inevitably so for four main 
reasons. First, there was the obvious one that C.O.L was a 
pioneer body lacking previous experience of its own on which 
to draw. Secondly, so long as the United States remained at 
peace his position was equivalent to Hoover's that is to say, 
he had responsibility without power. For example, to conduct 
propaganda operations he needed, among other things, control 
of short-wave radio facilities; but broadcasting in the United 
States is a private industry and before Pearl Harbour the owners 
of short-wave stations could not be ousted or even coerced. In 
many instances they refused to follow C.O.I, directives or 
to use C.O.L material. Again, the State Department was 
reluctant to risk identification with an agency whose covert 
functions clearly endangered United States neutrality and, 
despite initial promises to the contrary, largely withheld its 
co-operation which was needed to provide "cover 95 for Ms 
operations abroad. 

'Thirdly, the older agencies, whose collaboration he required 
to carry out his task of correlating intelligence, were at the 
outset somewhat hostile, partly through scepticism regarding 
the worth of an organization which was of necessity staffed by 
amateurs, and partly through fear that C.O.I, would infringe 
on their own prerogatives. This was particularly true of the 
F.B.L, and to a lesser extent of the Service Intelligence De 
partments. Lastly, when war came, Donovan was expected 
by the Chiefs of Staff, as justification for the continuance of his 
organization, to produce immediate results despite the fact 
that he had insufficient time and authority to make adequate 
preparations. 



156 

'It is fair to say that it is likely that, if Donovan had not been 
able to rely upon B.S.C. assistance, his organization could not 
have survived. Indeed, it is a fact that, before he had his own 
operational machinery in working order, which was not until 
several months after Pearl Harbour, he was entirely dependent 
upon it.' 

For example, before Pearl Harbour and for several months 
thereafter, the bulk of C.O.L's secret intelligence was supplied 
by Stephenson's organization from its various sources. Two 
short-wave radio services, which B.S.C. controlled one for 
broadcasting to Europe and the other to the Far East were 
made available to C.O.I, immediately after Pearl Harbour and, 
in Stephenson's words, 'they were the foundation of all American 
short-wave propaganda'. Experts in every branch of secret 
activities, intelligence, counter-espionage, subversive propa 
ganda, communications, and 'special operations* of all kinds 
were put at Donovan's disposal. 'From the beginning the 
British gave him foil co-operation', Stewart Alsop and Thomas 
Braden have written in their account of the Donovan organiza 
tion. 'They told him how they trained their men, what weapons 
they had, and how they communicated with the resistance. 
Breaking the precedent of centuries, they even sent a man over 
to sit down with Donovan and explain the workings of British 
espionage.' 1 In fact, C.O.I, officers of all divisions, as well as 
C*O.L agents, were in the beginning trained at the B.S.C. 
school in Canada, which was set up near Toronto in December, 
1941. The school served as a model for Donovan's own training 
schools which were later established under the guidance of 
B.S.C. instructors. 

'In short', said Stephenson afterwards, 'B.S.C. had a con 
siderable part in the upbringing of the agency of which it was in 
a sense the parent. The effort thus expended would have been 
wasted only if C.O.I., to carry the metaphor a little further, had 
never grown to man's estate. In fact, from the story of O.S.S. 
which follows, it is evident that it proved extremely rewarding, 
for not only was Donovan's organization eventually equipped 
to discharge its responsibilities, but since it owed much to our 
efforts it was inevitably prepared to work in fullest accord with 
us.* 

1 Stewart Alsop and Thomas Braden. Sub Rosa (1948), pp. 16-17. 



Mention has been made of the two short-wave radio services 
controlled by Stephenson's organization. Their broadcasts 
together covered Europe, Africa, the Middle East and the Far 
East, and were propaganda media of the utmost importance for 
the British war effort. 

First, there was Station WRUL, which transmitted from 
Boston and was the only short-wave radio station in the United 
States which was not run for profit. It had been founded by a 
rich industrialist, Walter Lemmon of International Business 
Machines and was supported by several big charitable institu 
tions. Its avowed purpose was to spread international goodwill. 
Its transmitting power 50,000 watts was unsurpassed by any 
other station in either the Americas or Germany, It had a large 
international audience, linked together in an Association of 
Listeners in thirty different countries, and it received an average 
of a thousand letters every week. Its listening public in France 
alone was estimated at 400,000 strong at this period. Before 
Stephenson took a hand in its affairs, the greater part of its 
transmitting time was devoted to programmes in English, 
which were of course not in any way supervised by propaganda 
experts. 

Through a series of trusted intermediaries Stephenson now 
began to supply Station WRUL with everything it needed to 
run a first-class international programme worthy of its trans 
mitting power and declared policy. B.S.C. subsidized it 
financially. Stephenson's organization recruited foreign news 
editors, translators and announcers to serve on its staff. It 
furnished it with material for news bulletins, with specially 
prepared scripts for talks and commentaries, and with tran 
scribed programmes. As a result, its foreign language broad 
casts rapidly increased in number, variety and influence. By 
the middle of 1941, Station WRUL was virtually, though quite 
unconsciously, a subsidiary of the Stephenson organization, 
sending out covert British propaganda in twenty-two different 
languages and dialects, including Armenian, Iraqi, Senegalese 
and Serbo-Croat. It was controlled by a network of inter 
mediaries drawn mainly from the various minority groups 



i 5 8 

with which B.S.C. maintained contact. Material was prepared 
in Stephenson's offices and then passed to the different inter 
mediaries, who gave it to the station, which regarded itself as 
completely independent, even if its independence was merely 
nominal. 

In this way Stephenson was able to implement high policy 
directives from London. For instance, when the British 
Ambassador in Madrid, Sir Samuel Hoare, asked for an 
immediate propaganda campaign designed to convince General 
Franco and his advisers that Spain would be the loser if she 
entered the war on Germany's side, Stephenson was able to 
carry out the Ambassador's request. The broadcasts in Spanish 
were written by B.S.C. agents and the campaign successfully 
launched in June, 1941. 

Thus it happened that an American radio station with an 
unsullied reputation for impartiality was, for many months 
during the most critical period of the war for the British, 
unknowingly harnessed to the task of broadcasting British 
propaganda on a scale almost comparable in quantity of out 
put with the official B.B.C.'s Overseas Service. But to maintain 
control over it through intermediaries was no easy matter. 
None of the instructions, which B.S.C. issued covertly, had the 
backing of any legally constituted authority, and even Donovan, 
when he had officially entered the propaganda picture with the 
backing of the President's directive in July, 1941, had no power 
in practice to dictate the policy of what was after all a privately 
owned and administered American concern. Then the station 
management, docile enough at first, became more and more 
difficult to handle as WRUL's importance and influence 
increased. The directors sometimes rebelled against the 
tendentious tone of the broadcasts. And Lemmon himself, 
enjoying his new-found power, was often given to displays of 
self-assertiveness, which required tactful treatment. The 
enemy too was aware of the station's value as a propaganda 
channel and attempts were .made to sabotage some of the 
transmissions, particularly of Free French material, by sub 
stituting other material on the ground that the broadcasts of 
the former were 'indistinct*. Close and constant watch had to 
be kept on personnel and every broadcast had to be carefully 
monitored by Stephenson's communications experts. 



159 

So long as the United States remained neutral,, neither 
WRUL nor any other short-wave station could be taken over 
by any Government agency. Thus Donovan, who had been 
officially made responsible by the President for developing 
propaganda broadcasting for his country, lacked sufficient 
authority to discharge this responsibility on his own initiative. 
The most he could do was to supply the stations with material 
direct and hope that they would broadcast it. In fact, they 
usually refused to accept the C.O.L directives, including 
ironically enough WRUL. Thus Donovan failed to com 
mandeer the facilities of the short-wave stations for C.O.L, 
although he was able to use WRUL jointly with B.S.C. 
under cover. This was the situation within a fortnight of Pearl 
Harbour. 

Incidentally, President Roosevelt always took a much greater 
personal interest in propaganda as an arm of warfare than did 
the British Prime Minister. For example, he was impressed by 
a series of broadcasts attacking Germany put out from London 
by Sir Robert Vansittart, the Chief Diplomatic Adviser to the 
Foreign Office and subsequently published under the title, 
Black Record. On November 7, 1941, while the United States 
was still neutral, he sent the texts of these broadcasts to 
Donovan with a memorandum saying he thought it could 
c be used with great effect by some broadcaster in this country 
if it were edited to suit our needs*. Obviously, the more British 
or British Empire sentences or paragraphs could properly be 
deleted. 'Also/ the President went on, C I am inclined to think 
that the efforts to prove that the Germans have always been 
barbarians for a thousand years as a nation go a bit too far. 
Those paragraphs should be stressed which place the blame on 
the German people for following utterly destructive leadership 

and on the leaders themselves. 9 He hoped that Donovan 

would read 'this little record 9 because, as lie had suggested, if 
it were revised for the American public, c it might do a lot of 

good*. 1 

The significance of WRUL lay not so much in its value to 
Stephenson and his organization as an instrument for directing 
British propaganda abroad although that was important as 
in the fact that it represented a ready-made broadcasting 

1 Roosevelt. Ill, 399- 



i6o 

service for American propaganda, which was available to 
Donovan and, as we have already seen, was in fact turned over 
to him as soon as the United States entered the war. Had B.S.C. 
not undertaken this work, Donovan's political warfare activities 
after Pearl Harbour would have been considerably retarded, 
for while WRUL as such would have been at his disposal, he 
would have found in it little more than a powerful transmitter 
to serve his immediate needs. All the necessary preparations in 
the way of recruiting and training news editors, translators, 
commentators and announcers would still have been ahead of 
him. As it was, he had the nucleus of an excellent propaganda 
broadcasting service at his command. 

Similar considerations applied to Station KGEI, owned and 
operated in San Francisco by the General Electric Company 
and the only station broadcasting to the Far East at this time. 
(Its service was later supplemented by KWID, a 100 kilowatt 
station erected as the result of Stephenson's endeavours.) 
Control of KGEI was obtained for Stephenson's organization 
through the general manager and chief engineer of the Malaya 
Broadcasting Corporation who happened to be on leave and 
represented themselves as interested in securing rebroad- 
casting rights for the Singapore radio station. In turn material 
put out by Stephenson and broadcast from KGEI and KWID 
was picked up and rediffused both by the Malaya Broadcasting 
Corporation from Singapore and the Australian Broadcasting 
Commission from Australia. 

As in the case of WRUL, Donovan assumed control of the 
two services broadcasting to the Far East immediately after 
Pearl Harbour, while Stephenson and his agents, who had 
largely staffed both services, remained to give what advice and 
other help they could, as it were, from the side lines. It was a 
most harmonious and, from the point of view of the Anglo- 
American war effort, a most productive liaison in every field it 
covered, although, as will be seen, Donovan later had to hand 
over much of his responsibility for the conduct of political 
warfare to another agency. This was so for three basic reasons. 
First, C.O.L had access through B.S.C. to essential material 
which Donovan's incipient organization could not obtain 
elsewhere. Secondly, C.O.L regarded B.S.C.'s knowledge and 
experience, rightly or wrongly, as one of their most valuable 



assets. Thirdly, the individual officers concerned liked and 
trusted each other personally. They worked side by side, not as 
representatives of rival organizations inspired by mutual 
feelings of rivalry, but as friends in a common endeavour, 
They were devoted to a practical association, which had 
already accomplished much and might well accomplish more. 
In some ways It was a pity that in the all-important sphere of 
propaganda this co-operation was destined soon to be 
terminated. 

One typical example may be given of how this co-operation 
worked in the short period between Pearl Harbour and the 
handing over by Donovan of his responsibilities for overt 
propaganda to the newly created U.S. Office of War Informa 
tion six months later. 

In May, 1942, when Japan had overrun much of south-east 
Asia, and Japanese pride and self-assurance were at their 
height, Rear-Admiral TosMo Matsunaga broadcast a talk in 
Japanese from Tokyo to Japanese-speaking audiences abroad, 
describing a tour of inspection which he had made through 
Japan's newly acquired empire. He described how captured 
American sailors were employed on forced labour, apparently 
in the Celebes. He said: 

They are engaged in the work of filling up the holes in the 
airfields. They are engaged in comparatively easy jobs. There 
are many who are suffering from hunger because they are not 
used to the Japanese type of food, and there are some who 
get very lazy because of the extreme heat. These who do not 
do their part are beaten by the Japanese guards . . . Those 
who are hard to handle are severely beaten with a rope which 
is similar to the rope used by sailors. Because of the pain the 
lazy American prisoners continue the work with painful 
expressions on their faces. 

Indonesian natives who have lived on this island for a long 
time watch these prisoners, and they say: 'Previously these 
white people treated us like animals, and now the Japanese 
soldiers, who have faces similar to ours, are beating them 5 . . . 
The natives are very thankful for what the Japanese soldiers 
have done for them. 

The broadcast was withheld from publication by the 
American authorities under the terms of the U.S. Army's 
official plan for psychological warfare against Japan, drawn up 



1 62 

by Colonel Solbert and Ms assistants in the Psychological 
Warfare Branch and approved by the Chiefs of Staff, Secretary 
of War Stimson and Secretary of State Hull. The Army's 
reasons for opposing the publication of Japanese atrocity 
stories were that it might provoke reprisals against Japanese 
and Japanese-Americans in the United States and might 
encourage the Japanese to engage in further brutalities; also 
that the Army wished to fight the war 'according to the 
civilized rules'. There was a hint too that racial questions, 
which might induce negroes to side against the white peoples, 
were to be played down. 

Stephenson's Japanese experts pointed out that this policy 
was based on a misconception of Japanese psychology. It failed 
to realize that Japanese atrocities were intended to destroy the 
prestige of the white races, as indeed Matsunaga had acknow 
ledged in his reference to the Indonesian spectators, and as was 
shown by the fact that British prisoners-of-war were being 
worked as coolies in Malaya, where there was no shortage of 
native coolie labour. As Stephenson pointed out, by publicizing 
these facts, in conjunction with strong protests, the United 
States Government might help both to alleviate the conditions 
described and to undermine Japanese morale, since the 
Japanese are sensitive to 'loss of national honour'. These 
atrocities, he argued, could easily be interpreted as a proof that 
the Japanese Army was a gang of savage barbarians. Protests 
against them would, therefore, impel the liberal elements in 
Japan to curb the excesses of the militarists and ultimately to 
accept the allied propaganda theme that Japan was being 
betrayed by the military clique in power. It was recalled that, 
after the detailed reports of the looting of Nanking in 1937 
were published in America, the officers responsible were 
punished, and that conditions in Hong Kong had noticeably 
improved after Mr. Eden's recent denunciation of Japanese 
methods in the House of Commons. 

These arguments, vigorously repeated by Donovan in the 
official circles concerned, eventually had the desired effect, 
and the U.S. Office of Facts and Figures was directed to 
release this and similar stories. Whether they had much im 
mediate effect in Japan is doubtful, although they unquestion 
ably shocked the civilized world and provided substantial 



1 63 

evidence which was subsequently used to good effect in the 
various Japanese war crimes trials. 



At first sight it might be thought that the secret inteMigence 
with which Stephenson was supplying the Donovan organiza 
tion and so playing a vital part in its development was at the 
expense of Hoover and the F.B.I. Such was not the case. In 
1941, the F.B.I, received from Stephenson's staff no less than 
one hundred thousand reports, memoranda and other docu 
ments on a wide range of subjects going considerably beyond 
security and counter-espionage matters. However, as has 
already been indicated, Hoover keenly resented Donovan's 
organization from the moment it was established, since he 
feared that its interests would clash with those of the F.B.I., 
particularly in Latin America, and his resentment was 
inevitably extended towards its British collaborators. At the 
same time Stephenson was faced with an acute problem in the 
shape of the introduction in Congress of a legislative instrument 
known as the McKellar Bill. 

The publication of the Dies Committee's report on enemy 
subversive activities in the United States, as well as the dis 
coveries which the F.B.I, was making on the same subject, had 
led to the promotion of a measure by Senator Kenneth 
McKellar, a Democrat from Tennessee, which transferred 
the registration of foreign agents in the United States from 
the State Department to the Department of Justice; it also 
amended most drastically the conditions under which these 
agents would in future be required to register. Under the 
impact of Pearl Harbour, the measure was quickly rushed 
through Congress, and at the beginning of 1942 it was sent 
to the White House. In its original form, the Bill made 
no distinction between agencies friendly to the United States 
and others, and generally it called for the production of all 
details of the work being carried on and how their funds 
were expended. 

Immediately after the Bio Conference in January, 1942, 
which resulted in greatly increased opportunities for United 
States participation in secret activities in Latin America, a joint 



164 

committee was set up for the purpose of co-ordinating all Anglo- 
American intelligence operations in the Western Hemisphere. 
At its first meeting, which was attended, among others, by 
Stephenson, Hoover, and Assistant Secretary of State Adolf 
Berle, the latter proposed that Stephenson's organization should 
maintain liaison with no United States Government agency 
other than the F.B.I. Stephenson naturally resisted this proposal 
and went on to refer to the McKellar Bill, pointing out that in 
its present form it would mean the end of British Security Co 
ordination inasmuch as the Bill provided that c all records, 
accounts and propaganda material used by foreign agents 
(whether allied or neutral, secret or open) would be liable to 
inspection by the U.S. Government authorities at any time'. 
Berle replied, on careful reflection, that this was regrettable 
but that it was now too late to effect any modifications in its 
provisions since the Bill was already on the President's desk 
awaiting signature. The truth is that for some time past the 
State Department had been aware of some of the detail of 
B.S.C.'s secret activities, and there is no doubt that Berle, who 
had a hand in drafting the measure in its original form, hoped 
that the Stephenson organization would be unable to continue 
to function as hitherto. 

Stephenson left the meeting before it was over and went 
immediately to the C.O.I. offices on Constitution Avenue, 
where he put the position bluntly to Donovan. If the Bill became 
law as it stood, then Donovan's organization might well fold up 
too. Donovan thereupon picked up the telephone and asked to 
be put through to the White House, He then requested an 
immediate appointment with the President which he was given. 
The result of this interview was that he was able to persuade 
Roosevelt not to sign the Bill unless and until it was modified 
to allow adequate safeguards for Stephenson's interests and 
those of B.S.C. A few days later the President vetoed the 
measure and sent it back to Congress. A month later the Bill 
was reintroduced in a form which relieved B.S.C. from the 
crippling provisions as to the compulsory disclosure of its 
records. It became law on May i, 1942. 

In its final legislative form the McKellar Act expressly 
exempted from registration, at the discretion of the Attorney- 
General, the agencies of foreign governments, 'the defence of 



i6 5 

which the President deems vital to the United States', provided 
that such agent engaged 'only in activities which are in defence 
of the policies, public interests or national defence, both of 
such government and of the defence of the United States and 
are not intended to conflict in any of the domestic or foreign 
policies of the Government of the United States*. As a result 
Stephenson merely had to file with the Department of Justice 
a statement of particulars of B.S.C.'s security functions and 
a list of its personnel. However, the fact remains that, if it 
had not been for Donovan's timely intervention with the 
President, no allied mission in the United States which did 
not enjoy diplomatic status could have carried on effectively, 
and not only B.S.C. but also C.O.I, would have ground to 
a halt. 

Thus it was established that the F.BJ. no longer had the 
monopoly of collaboration with British Intelligence. The fact 
that it had lost this monopoly was inevitable not only on account 
of the emergence of Donovan's organization but because, with 
the end of neutrality, the U.S. Service Intelligence Departments 
G.2 and O.N.I., also insisted on maintaining direct liaison 
with B.S.C. But Hoover had shown himself more than once as 
the kind of man who does not bow easily to the inevitable 
that was at once his strength and his weakness and it took a 
long while to convince him that he could not succeed in Ms 
determination to exclude the British organization from contact 
with other U.S. intelligence agencies. 

Berle, on the other hand, proved more immediately amen 
able. Stephenson had many discussions with him during 1942 
in an effort to temper his hostility, and the Assistant Secretary 
of State was eventually persuaded that, to quote his own words, 
'as a realist he owed it to his country to find the best method of 
co-operation with Great Britain*. Berle's changed attitude 
eventually provided the means of convincing Hoover that his 
efforts to control B.S.C.'s activities to his own exclusive ends 
were futile. In June, 1943, a memorandum from the Depart 
ment of Justice to Stephenson, which bore unmistakable signs 
of having been composed at Hoover's instigation, directed 
B.S.C. to desist from direct contact with the U.S. armed 
services and maintain liaison only through 'approved military 
channels'. Since Stephenson knew that this directive was 



1 66 

diametrically opposed to the wishes of U.S. services intelligence, 
he referred it to General George Strong, head of G.2, who 
stated unreservedly that *he was not prepared to submit to an 
F.B.I. censorship'. At a subsequent meeting with Adolf Berle, 
which was attended by all the interested parties, Berle endorsed 
General Strong's view and ruled that B.S.C. should be allowed 
to decide for itself to which agencies and in what manner it 
would transmit its information. Hoover had no choice but to 
accept this ruling, and thereafter, it is only fair to add, he 
abided by it without apparent demur. 

Fortunately the period of strained relations between B.S.C 
and the F.B.I. did not prove lasting. But while it endured, for 
about eighteen months, it was a difficult time for Stephenson, 
who was endeavouring to sustain Donovan and at the same 
time continue to supply Hoover with the security and counter 
espionage intelligence which his organization still needed from 
British sources. For some months Hoover was convinced that 
Stephenson was deliberately withholding information from his 
agents in Latin America and passing it to Donovan instead. 
This was not true, but the impression remained and rankled. 
Sometimes, too, information on a particular subject in which 
he was interested had to be obtained from London, and the 
delays and consequent reminders sent before it was eventually 
forthcoming proved irksome to both parties. A good deal of 
correspondence, for example, took place by reason of Hoover's 
request for information on Communist activities in Britain 
before he was provided with the complete and exhaustive 
survey which he desired. 

Incidentally this latter information was to come in useful 
when Hoover opposed a plan of Donovan's to send a mission 
to Moscow in exchange for a mission from the Soviet Security 
Service (N.K.V.D.) to Washington. C I think it a highly dan 
gerous and most undesirable procedure to establish in the 
United States a unit of the Russian Secret Service which has 
admittedly for its purpose the penetration into the official 
secrets of various government agencies 3 , Hoover wrote at the 
time to the President's close friend and adviser, Harry Hopkins. 
The history of the N.K.VJX in Britain showed clearly that the 
fundamental purpose of its operations there was to surrepti 
tiously obtain the official secrets of the British Government.* 



i6 7 

The proposed exchange of intelligence missions was consequently 
blocked by the White House 9 although the author of The F.B.L 
Story is perhaps not altogether correct when he states that it was 
'quietly forgotten by everyone concerned*. 1 

Despite these difficulties, the former close and friendly rela 
tions between Stephenson and Hoover were eventually restored 
and no bitter feelings remained on either side. Even during the 
period of estrangement, the agents of their respective organiza 
tions often worked together in complete harmony 3 notably in 
Latin America, and some of the best results in joint counter 
espionage work during the whole of the war were obtained by 
their collaboration during this period, as is presently described. 
None realized the value of this collaboration in the interests of 
United States security more than Hoover himself and he was to 
express it in the most generous terms to Stephenson when the war 
was over. C I have indeed regarded as fortunate the circumstance 
which brought about the establishment of your office in New 
York City and especially the designation of so capable and 
experienced a man as yourself to direct it', Hoover wrote to 
Stephenson on February 21, 1946. *In retrospect I feel that the 
direct liaison between our organizations which resulted con 
tributed immeasurably to our efforts in protecting the internal 
security of this country and to what I regard now as successful 
intelligence coverage achieved by your organization and ours 
on behalf of the whole Allied war cause/ 



The period during which Donovan's growing organization 
largely depended upon Stephenson for material aid lasted, 
broadly speaking, until the summer of 1942 when C.OJ. was 
transformed into an essentially military body and was placed 
under the U.S. Chiefs of Staff, being henceforth known as the 
Office of Strategic Services (O.S.S.). This period was one of seem 
ingly incessant and busting activity in the Constitution Avenue 
offices and also at the General's house in Georgetown where, 
like Stephenson, he rarely slept for more than four hours a night, 
but unlike the quiet Canadian he did most of Ms entertaining at 
1 Whitehead, 199-200. 



i68 

breakfast. This was the hour when he was particularly receptive 
to new ideas. 'Why don't you do it?', he would say to a breakfast- 
time visitor who had come up with some ingenious suggestion, 
or else 'Sure 3 let's give it a try'. The man would then go off and 
hire the necessary staff of assistants and soon they would all be 
working as a more or less self-contained unit under the Donovan 
umbrella. On other occasions, when he was particularly im 
pressed, he would say, Tm going to handle this myself or 
'Leave it all to me'. Naturally he could not handle everything 
himself. Usually Buxton or Murphy would succeed in persuad 
ing him to hand over the execution of it to them, while letting 
him continue to keep a finger in the pie. 1 

If General Donovan did not shine as an administrator or 
personnel manager it was said that he ran O.S.S. like a 
country editor, not like a business man there can be no doubt 
about his creative energy and the magnetism of his personality 
which ultimately inspired the devotion of a war-time staff of 
1 2,000 men and women. Nor were there any doubts about the 
reputation for personal courage he had won as a commander in 
the earlier world conflict. One dark night in Washington, he 
was involved in a nasty motor accident, when he was run down 
by an allegedly drunken driver and his legs were badly injured. 
He refused point blank to be taken to hospital. Next day he 
had a luncheon engagement in New York with Dr. Bruening, 
the former German Chancellor, and Mr. (now Sir) John 
Wheeler-Bennett, an expert on German political and military 
history. He was determined not to postpone the meeting, as 
many others would have done in the circumstances; it may be 
noted that Donovan was then nearly sixty years old. On the way 
to New York by train, he had his legs put into splints. He went 
on to the St. Regis Hotel, where he arrived punctually, spoke 
and listened well and was very courteous. He did not mention 
his accident and gave no sign that he was in pain, beyond 
(what was most unusual for him) drinking two stiff brandies- 
and-soda. He then returned to Washington. 2 

On June 13, 1942, the President by Executive Order abol 
ished C.O.I, and established two new agencies in its place the 
Office of War Information (O.W.L) and the Office of Strategic 

1 AJsop and Braden, 20-22. 

2 Sir Robert Bruce Lockhart. Friends, Foes and Foreigners (1957), p. 10. 



i6g 

Services (O.S.S.). The former, under Elmer Davis, fifty-two- 
year-old author, ex-Rhodes Scholar at Oxford and news analyst 
for the Columbia Broadcasting System, was entrusted with 
responsibility among others for all overseas propaganda, except 
what was known as 'black 5 , that is covert propaganda. The 
latter, headed by Donovan, was entrusted with C.O.I.'s 
remaining functions, in the words of the President's order, *as 
an operating agency of the Government under the direction and 
supervision of the Joint Chiefs of Staff'. From these functions 
the Western Hemisphere was expressly excluded. In other 
words, in its designated field, O.S.S. was responsible for collect 
ing secret intelligence, preparing intelligence appreciations for 
the Joint Chiefs of Staff (Research and Analysis), and the 
planning and execution of secret operations (including covert 
propaganda such as the operation of clandestine radio stations), 
and the training of personnel for 'strategic sendees 5 . In this 
context the term 'strategic services 5 was defined as c all measures 
(except those pertaining to the Federal programme of radio, 
press, publication and related foreign propaganda activities 
involving the dissemination of information) taken to enforce 
our will upon the enemy by means other than military action, 
as may be applied in support of actual or planned military 
operations or in furtherance of the war effort*. 

Incidentally, it was Robert Sherwood who was responsible 
for the amputation of the propaganda section from the body of 
C.O.I. He had organized this section, known as the Foreign 
Information Service (F.I.S.), in order to plan and carry on 
psychological warfare outside the Western Hemisphere, and 
having chosen to quarrel with Donovan on a point of principle 

he wished his section to remain civilian in character, while 

Donovan would have it subject to military discipline ike the 
rest of O.S.S. Sherwood now transferred himself and his 
department to the Elmer Davis organization, where F.LS. 
became the Overseas Branch of O.W.L 1 As Stephenson put it, 
'he and Donovan wasted no time on farewells 9 . Nor was the 
rapture ever healed. This was unfortunate, since both men 
were figures of outstanding ability and both were intimately 
concerned with the conduct of political warfare, so that smooth 
working and efficiency at military headquarters were not 

1 Sherwood. II, 935-6. 



improved bythe differences between the two bosses, especially as 
the differences were taken up much more violently by their 
respective subordinates. This developed into a major row when 
O.S.S. claimed the right to conduct all propaganda in the 
military field of operations. It could only be settled by General 
Eisenhower, as Supreme Commander of the Allied Expedi 
tionary Force in Europe, creating an integrated Anglo-Ameri 
can Psychological Warfare Branch (P.W.B.) of his own, 
responsible for the execution of propaganda in the theatre of 
operations aad taking its political guidance from P.W.E. and 
the Overseas Branch of O.W.I., the two civil agencies in London 
which were headed respectively by Sir Robert Bruce Lockhart 
and Robert Sherwood. Happily Sherwood and Lockhart 
worked together in the closest harmony. 1 

From the outset, before Sherwood moved to London, his 
relations with Stephenson were invariably most cordial. 
'There goes a man of that rare treasure, complete integrity*, 
Stephenson remarked to the present writer late one evening as 
we were walking along Fifth Avenue and espied Bob Sherwood 
in the distance. There are not many around, especially in the 
present rat race/ 

Unfortunately for Stephenson his official relations with 
Sherwood were interrupted in the summer of 1942 soon after 
the creation of CXW.L This was due to the arrival in Washing 
ton of a Political Warfare Mission from London in the charge 
of the Hon. (later Sir) David Bowes-Lyon, a brother of the 
English Queen and uncle of the present Queen. Bowes-Lyon 
proposed to take over all Stephenson's overt propaganda work, 
of which the most important was broadcasting to the Far East. 
This proposal was at first resisted by Stephenson on the ground 
that its implementation must impair, not only the continued 
operation of liaison arrangements which were working smoothly, 
but also the whole conception of co-ordinated activity which 
Stephenson's organization had successfully achieved in the 
United States. Sherwood was anxious that they should continue 
as heretofore and he sent a message to Ambassador Winant in 
London asking him to request the Foreign Secretary, Anthony 
Eden, in this sense. He was assured that they could be. But 

1 Bruce Lockhart, op. at. p. 101. See also his Comes The Reckoning (1947), 
at p. 196. 



inevitably they were not, since the decision had been taken to 
effect a separation of functions similar to that which had taken 
place between O.S.S. and CXW.L In August, 19423 Stephenson 
accordingly handed over all the relevant files to Bowes-Lyon 
and gave him what help he could in the recruiting of expert 
staff, which Bowes-Lyon urgently needed. In an extraordinarily 
laudatory obituary notice which appeared in The Times on the 
occasion of Bowes-Lyons's death in 1961, it was stated that he 
was 'perfectly equipped* for the task of establishing relations 
with parallel American agencies on a basis of confidence. 
'Both the work he did and the way he did it gained substantial 
praise from those on both sides of the Atlantic who had any 
thing to do with those particular matters/ wrote The Times. 1 
Be that as it may, Stephenson was certainly not included 
among these admirers, and the fact remains that relations 
between the Bowes-Lyon mission and O.W.I, were never so 
close or so productive as were the previous arrangements 
with B.S.C. 

At the time the President issued Ms order establishing O.S.S.,, 
Donovan and Stephenson both happened to be in London, and 
it was therefore the occasion for discussions concerning the 
future collaboration between O.S.S. and its British equivalents. 
Out of these discussions there emerged agreements for pooling 
results of activities independently undertaken in the field of 
secret intelligence and for a working partnership in the field 
of special operations. Furthermore, O.S.S. decided to follow 
the example of British Intelligence by establishing a separate 
division to undertake counter-espionage overseas* So far as 
Europe was concerned, it was agreed that this work should be 
administered jointly by British Intelligence and O.S.S. from 
London. 

Thenceforward Anglo-American collaboration in all forms 
of secret activity outside the Western Hemisphere steadily 
increased in scope and value, and while its emphasis inevitably 
shifted from the United States to the various operational 
theatres, notably after the launching of the 'Second Front* in 
Europe in 1944, Stephenson's organization had the responsi- 
bility throughout of maintaining and co-ordinating liaison 
with O.S.S. headquarters in Washington. 

1 September 14, 1961. 



172 

It is unnecessary to describe the detailed working of this 
relationship. But some examples of its product deserve mention. 
The material which B.S.C. purchased (for S.O.E. in London) 
from O.S.S., either by cash payment or under Lend-Lease ? 
included much that could not otherwise have been obtained. 
For instance, in May, 1943, Stephenson informed Donovan 
that three ships with a minimum range of 3,000 miles, a 
maximum speed of at least 16 knots and four tons of cargo 
space were required by the British for 'irregular operations 3 in 
the North Sea. Donovan persuaded the U.S. Navy to release 
three loo-foot submarine chasers in the belief that they were 
to be used in exclusively O.S.S. activities. They were fitted 
with anti-aircraft and other guns, depth charges and radar, 
and they were transferred to Britain with great secrecy four 
months later. Throughout the winter of 1943-44 they ran the 
German blockade to and from Sweden, carrying not only 
valuable material such as ball bearings but also a number of 
important passengers. Similarly a varied assortment of com 
modities was obtained from the U.S. War Department, 
including radio equipment, cameras, landing craft and kayaks. 
On the other hand 5 B.S.C. supplied Donovan's requirements 
during the period when these were not in production in the 
United States. It provided him, for example, with all the 
equipment he needed for action preparatory to Operation 
Torch, as the allied invasion of North Africa was known. 
This included some out-of-the-way items such as land mines 
disguised as camel dung. 

The underground needed money, and many delicate strata 
gems for the purchase of foreign currency had to be devised and 
carried out in the greatest secrecy. Here Donovan's friendly 
collaboration proved invaluable in securing large quantities of 
this commodity, often at very short notice. For instance, after 
protracted negotiations with the U.S. Treasury and the 
Bankers' Trust Company, B.S.C. joined with O.S.S. to pay the 
dollar equivalent of nearly two million Portuguese escudos. 
This money was required by British secret agents in Europe, 
and it was made available to them through the Lisbon office 
of Jose Bensaude, the Portuguese shipowner. 

On another occasion, over eighteen million dollars in 
denominations of $50 and Sioo were secretly transferred from 



1 73 

New York to London for the use of British and allied under 
ground organizations in Europe before and during the eventual 
invasion. It involved a long series of manoeuvres beginning in 
1942 and ending two years later, which were known to no one 
outside B.S.C. and S.O.E. in London except Donovan and two 
of his officers. If the transaction had been direct between the 
British Treasury and the U.S. Treasury, too many people 
would have been involved with the result that both the despatch 
and destination of the notes might easily have become known 
to the enemy. 

To get round this difficulty, it was arranged that one of 
Donovan's men should draw the notes in large denominations 
from the U.S. Treasury. The first three millions were accordingly 
sent over in February, 1943, and were exchanged for one, two 
and five dollar bills, collected in Britain. After being shipped 
back to the U.S.A., these were paid into the U.S. Treasury by 
the same O.S.S. officer who had drawn the large-denomination 
notes. 

Everything went smoothly until it became apparent that, 
while one million dollars in large notes could go into one bag, 
thirty or forty bags were required for the same amount in small 
notes. Consequently, because of the shortage of aircraft cargo 
space and the fact that ships in convoy took anything up to four 
weeks to make the Atlantic crossing, the flow from east to west 
did not equal the flow eastward. After the first three millions 
had been drawn from the U.S. Treasury, despatched to London 
and distributed to the Poles, for whom nearly half the total 
was earmarked, the U.S. Treasury turned off the tap and 
refused to allow any more drawings until a dowa payment 
was made. In the cold eyes of the Treasury there was a limit 
to an overdraft, even when the client was a U.S. Govern 
ment agency. 

Meanwhile London was urgently asking for another two 
millions. The deadline was mid-March, for that was the last 
lunar period during which there would be sufficient darkness 
to enable planes to make the trip from England to Poland and 
back without undue risk of detection. Partly by persuasion, 
partly by the ungrudging help of Donovan and his men, and 
partly by the timely arrival in America of the first two million 
in small notes, the difficulty was overcome. By March 13, 1943, 



174 

the final consignment of the initial $5,000,000 had arrived in 
London for onward transmission to Poland. It was immediately 
transhipped and landed on Polish territory in almost total 
darkness. The plane made the return journey in safety, and the 
Polish underground was enabled to carry on for many more 
months without financial worries. 

Four or five months later, a further $5,250,000 was sent over 
to Britain, but on this occasion there were not sufficient dollar 
funds in Britain to make repayment in American currency. 
Somehow or other a cheque or series of cheques would have to 
pass from the British Treasury to the U.S. Government, and 
yet neither the American Treasury nor the Foreign Funds 
Control agency could be informed of the existence of the 
transaction or the reason for it. Donovan's financial assistant 
solved the problem. He drew the notes from the U.S. Treasury 
on behalf of O.S.S. and handed them to Stephenson's office for 
shipment to the United Kingdom. The British Treasury 
effected repayment by sending a cheque to the Ministry of 
Supply, which instructed the British Purchasing Commission 
in New York to draw equivalent cheques in favour of Donovan's 
financial assistant personally. The latter then passed the pay 
ment back to O.S.S. The advantage of this arrangement was 
that large payments for unspecified purposes by the Ministry 
of Supply in London or its purchasing mission in New York 
were common enough for such a transaction as has been 
described to pass unnoticed. 

Finally, between May and September, 1944, a further 
88,000,000 were transferred in exactly the same way. This 
time Donovan's financial assistant asked to be informed 
roughly where the money would be spent, by whom and under 
whose authority; he also asked whether it would be circulated 
or hoarded and whether any large sums were likely to reach 
enemy hands. He was given this information on the under 
standing that he kept it to himself. 

The war produced many examples of good Anglo-American 
relations, even if there were also some bad ones. None can have 
been more varied and at the same time more intimate and 
confidential than those which subsisted between 'Little Bill' 
Stephenson and c Big Bill 9 Donovan and their respective 
organizations. 



This is not the place for a detailed narrative of the achievements 
of O.S.S. The publication of a full and definitive history of 
Donovan's organization has hitherto not proved feasible, largely 
owing to the reluctance of the American authorities concerned 
to declassify much of the documentary material essential to 
such a project. However, because O.S.S. was in a sense the 
foster-child of B.S.G., it may be well to consider briefly what it 
achieved, as seen through the experienced eyes of British 
Intelligence and Special Operations. It is all the more desirable 
to put the record straight, since, while the actual war was being 
waged and O.S.S. was consequently obliged to hide its light 
under a pretty large bushel, it suffered from the jibes of 
columnists and others who liked to describe its initial letters as 
standing for <Gh So Social 5 , Oh Shush Shush 9 and 'Oh So 
Secret'. In fact, by war's end no less than 831 O.S.S. men had 
been decorated for bravery, men who in Donovan's words took 
'some of the gravest personal risks of the war ... on the express 
understanding that their heroism would have to remain 
unsung'. 1 

From the quantitative point of view the O.S.S. output was 
comparable with the combined efforts of the British S.I.S. and 
S.O.E., a most commendable achievement when it is remem 
bered how little time Donovan was afforded to build up his 
organization and how many serious obstacles he faced at the 
outset. 

There is a story told that, when the war was over and O.S.S. 
was about to be closed down, Donovan summoned one of his 
secretaries and said he wanted to look at the files. 

'Which files, sir? 5 the secretary asked. 

'All of them/ said the General. *Now that it 5 s all over and I 
have a little time, I want to read everything/ 

The secretary called the department where all the reports 
from the various O.S.S. officers and agents overseas had been 
deposited. After several hours of concentrated research and 
analysis, the man in charge of the registry called back. Working 

1 Alsop and Braden, 26. See also article by John Chamberlain on O.S.S. 
in Hfe 9 November, 1945. 



x 7 6 

at a steady eight hours a day on a six-day week, he said, the 
General could complete a cursory inspection of all O.S.S. 
reports in sixteen and a half years. 1 

When he first began to send agents abroad, Donovan had to 
overcome the prejudices of the heads of the American diplomatic 
missions. For instance, Admiral William Leahy, the U.S. 
Ambassador in Vichy, has described his sense of surprise when 
a young Chicago lawyer arrived on orders from Navy Secretary 
Knox to become Assistant Naval Attache at the Embassy. 
The Admiral soon discovered that he did not know which end 
of a boat went first and he wondered what kind of officers the 
Navy was commissioning. Some time later Leahy learned that 
he was a secret O.S.S. agent 'planted* in the American 
Embassy. However, the Admiral had to admit that he was e a 
very good spy capable and discreet', and that when the 
Embassy staff was imprisoned by the Germans in November, 
1942, the Nazis were unable to make out a case against him, 
although they definitely suspected espionage. On the other 
hand, Leahy objected to Donovan's agents in southern France 
sending messages through the U.S. Consulate in Marseilles on 
the ground that this would be *a serious reflection on our foreign 
service if we should be caught sending unneutral messages 
under the cloak of diplomatic immunity', and he ordered that 
the practice should cease. Later Donovan accused Leahy of 
interfering in his work. 1 told him that the diplomatic service 
was my business/ Leahy remarked afterwards. 2 

Qualitatively, too, it was Stephenson's considered opinion 
that much of O.S.S.'s work was without doubt of first-class 
importance judged by any standard. One example on the 
intelligence side deserves especially honourable mention. The 
head of the O.S.S* office in Berne was Allen Dulles, who was 
later to head the post-war Central Intelligence Agency (C.I.A.). 
To his office one night in 1943 there came a man known as 
George Wood, who was an important employee of the German 
Foreign Office in Berlin; during the next eighteen months 
Wood brought with him nearly two thousand microfilm 
photographs of 'top secret 5 German diplomatic correspondence 
between the Auswdrtigesamt and twenty different countries. It 

1 Alsop and Braden, 21. 

3 William D. Leahy. / Was There (1950), at pp. 22, 71. 



included reports from the German Military and Air Attaches 
in Japan, data on the structure of the German secret service in 
Spain and information regarding German espionage in Britain 
and the Irish Republic. An interesting example of the latter, 
which Wood supplied, revealed the existence of a secret radio 
transmitter in the German Embassy in Dublin which was used 
to direct submarine raids on allied shipping. 1 

This information was passed on to the British, but for a long 
time the British Intelligence chiefs in London refused to believe 
that it was anything other than a deliberate 'plant' by the 
enemy on the gullible Americans. Eventually Stephenson, who 
was convinced of its genuineness, ^raised a riot 5 , as he put it, in 
London, where he enlisted the assistance of the head of the 
Government Code and Cipher School. In due course, the 
cryptographers were enabled to check it against their own 
findings, with the result that its reliability was established 
beyond question. 

Shortly after his return to New York, Stephenson met Allen 
Dulles, who had come home to report, and he congratulated 
him warmly on his success. At the same time Stephenson wrote 
to Donovan as follows: 

New York, 

i$tk November, 1^44 

The visit here of your very able representative in Switzerland 
reminds me of the fact that when I was in London recently, 
I had the opportunity of going into the history and product 
of the 'Wood' traffic. This is certainly one of the greatest secret 
intelligence achievements of this war. 

I mention this exceptional case, but I must also express my 
sincere admiration for the way your whole SJ. organisation 
has been developed in what is, compared to the development 
of the various established secret intelligence organizations else 
where, a phenomenally short space of time. I say nothing at 
this moment about what I have seen of the operations of your 
other departments which are no less outstanding, but I cannot 
help recording my delight that your T side which is, after 
all, the most delicate operation in foreign fidds has been so 
amazingly successful. All those with any real experience, who 
know something of its operations and achievements, are 
astonished at the progress which has been made. 

1 Alsop and Braden, 227. See also Andrew Tully. CJJL: The Inadt Story 
(1962), at p. 42. 



1 7 8 

You have cause for pride in the accomplishment, and those 
concerned deserve every congratulation. But I look beyond the 
satisfaction which has been given me to play some role of minor 
assistance in its beginnings, to a profound hope and faith that 
the organization which you have so effectively created and 
developed will continue into the days of peace. 

After this war, you and I will probably be following our 
normal peacetime preoccupations. You well know my views 
about the importance of the United States government having 
its own world-wide secret intelligence organization. It may be 
that other governments, possibly with evil intentions, would not 
welcome the continuation; but I, personally, have always had 
the deepest conviction that, if such an organization as yours had 
existed in the years following the last war, this war might have 
been averted. There is no need to go into details of what I 
consider to be absolutely irrefutable arguments in support of 
this contention, because they are known to you and I think 
that you absolutely agree with me. 

I write you this letter now not only to express my admiration 
for the pages of history you have already made, but also to say 
once again that I hope and trust that your achievements of the 
past are to be but the sound foundation of the future S.I. 
organization of U.S.G. 

The receipt of this letter from his closest British friend and 
collaborator encouraged General Donovan to propose to 
President Roosevelt the eventual setting up of a permanent 
central secret intelligence organization in Washington. This 
he did in a memorandum, which was significantly dated three 
days after Stephenson's letter. 1 

Washington, B.C. 
i8th November^ 1944 

I have given consideration to the organisation of our 
intelligence service for the post-war period. 

Once our enemies are defeated the demand will be equally 
pressing for information that will aid in solving the problems 
of peace. 

This requires two things: 

1. That intelligence control be returned to the supervision 
of the President, 

2. The establishment of a central authority reporting directly 
to you. 

1 Sanche de Gramont. The Secret War (1962), at p. 127. 



179 

Had Roosevelt lived to complete Ms fourth term In the 
White House, he would undoubtedly have taken what he 
called e a direct interest in the proposed venture', and the 
considerable intelligence side of O.S.S. might not have been 
dissolved as it was by his successor. Also, C.LA. might have 
escaped a lot of its initial teething troubles. But that is another 
story. 

Besides the S.I. division, there were two other divisions in 
O.S.S. headquarters which produced useful intelligence and 
with which Stephenson's officers maintained regular contact. 
These were the Survey of Foreign Experts and the Research 
and Analysis Branch. Amongst other products, the former 
provided most important information concerning potential 
bombing objectives throughout Europe. The work of the latter 
in producing strategic surveys and topographical maps was 
generally regarded by the British as second to none. Between 
1942 and the end of the war it turned out 8 3 ooo map titles. 
c lt made its compilations available to me, 5 Stephenson has 
recalled, 'and I made certain that they reached those most 
directly concerned without a moment's delay. 9 Those whom the 
maps reached in this way included the British Prime Minister, 
and they were a conspicuous feature of Ms famous map room. 
Indeed, Churchill invariably took them with him on Ms 
official journeys. At the Quebec Conference in August, 1944, 
he called President Roosevelt into Ms room, pointed to the 
wall, and said, "See, Fve got them too!' 

Mention has already been made of the counter-espionage 
division of O.S.S. In this connection Stephenson made avail 
able to Donovan the deciphered wireless communications 
between Germany and the various secret wireless stations in 
South America concerning die activities of Nazi agents. Most 
of this traffic was from BerEn to Buenos Aires and vice versa, 
the outward-bound traffic being relayed from a large German 
naval wireless station at Bordeaux in Occupied France. 
British cryptographers succeeded in breaking the relevant 
ciphers at an early stage, so that the messages were readable 
almost from the beginning. In fact, the only wireless intercepts 
that Stephenson was specifically barred from passing to 
Donovan were those of the most highly secret operational 
character concerning the movements and plans of the enemy's 



i8o 

armed forces in the various war theatres, notably the Pacific 
and the Far East. 

'On numerous occasions', Stephenson has recalled, 'when 
Donovan consulted me about reports and appreciations which 
were destined for the highest levels from various departments 
of O.S.S. for example, Research and Analysis I would 
suggest alterations based upon the real rather than the deduced 
situations, as evidenced by these particular deciphered enemy 
communications. He always followed my advice in this, and I 
assumed that he shrewdly guessed what actuated it. I en 
deavoured to the end to get the Combined Chiefs of Staff to 
authorize that Donovan should be made personally privy to 
this by far the most important source of secret intelligence, but 
it was never agreed. I always felt uncomfortable about it; but I 
think, because of his constant prior reference to me on import 
ant appreciations, I was able to remould somewhat some 
incipient mistaken deductions and conclusions.' 

The final tribute to O.S.S. from the British side came in 
August, 1945, when, Germany having already been vanquished, 
victory was at last achieved over Japan. On that day, Major- 
General Sir Colin Gubbins, head of the Special Operations 
Executive in London, wrote to General Donovan in 
Washington: 

... I send to you and all the Office of Strategic Services the 
congratulations of S.O.E. upon the splendid contribution you 
have made to the defeat of our common enemy, and grateful 
thanks for your co-operation with us all over the world. 

It has been a pleasure to work with you and all the men 
and women under your command. The close association of our 
two organizations is a forerunner of what can be achieved by 
the Anglo-American unity which we all feel is so important 
for the future peace and happiness of mankind. 



CHAPTER VII 



PROPAGANDA AT WORK 



THE multifarious activities of British Security Co-ordination 
which have been described in the preceding pages, involved a 
staff of considerable proportions. Indeed at the height of its 

operations the B.S.C. headquarters numbered close on a thousand 
men and women. In the knowledge that Canadians on the 
whole got on well with Americans, Stephenson turned in the 
first instance to his own country for recruits to his organization. 
Thus Canada supplied him with specialists in many fields* 
including an admiral, a general and an air-marshal. One of the 
most brilliant Canadians was a Toronto professor, who was in 
charge of communications and was able to adapt the Western 
Union Telekrypton ciphering machines to carry the immense 
amount of secret traffic (over one million groups) which passed 
daily between New York and the various organizations in 
London which Stephenson represented. In addition, the devoted 
and hardworking female secretarial and clerical staff was also 
largely Canadian. 

On the other hand, many of the key executive jobs at head 
quarters were filled by British personnel, most of whom were 
specially sent out from England. Besides Sir Connop Guthrie, 
who has already been mentioned as head of the Security Division, 
and Ms assistant Walter Kani-Davies, the English business 
men and financiers, who at one time or another belonged to 
B.S.C., included Ingram Fraser, John Pepper, David Ogilvy, 
Herbert Sichel, Richard Coit, Ivor Bryce, Louis Frank, Barty 
Bouverie, Bickham Sweet-Escott and A. M. ('Bill') Ross- 
Smith. The English theatre and radio provided Benn Levy, 
Eric Maschwitz and Giles Playfair, while journalism produced 
Sydney ( c BilF) Morrell and Christopher Wren, son of P. C. 
Wren of Beau Geste fame. The English Bar was represented by 

181 



1 82 

Alexander Halpern, a naturalized British subject born a 
Russian who had been legal adviser to the Kerensky Govern 
ment in Petrograd in 191 7, as well as by the author of this book. 
Colonel C. H. ('Dick') Ellis, who spoke Russian as well as Alex 
Halpern did English, came from the Foreign Office in London, 
as also did Walter Bell. The War Office sent over Major- 
General Alexander Tdfer-Smollett, who had been Lieutenant- 
Governor of Guernsey, and Colonel A. M. ('Bunny') Phillips. 
Finally there were four university dons, A. J. Ayer, G. A. 
Highet, K. J. Maidment and F. W. D. DeaHn. Treddy 5 Ayer is 
now Professor of Philosophy at Oxford; Gilbert Highet, who 
married the novelist Helen Maclnnes, is Professor of Latin 
Language and Literature at Columbia and has become a 
United States citizen; Kenneth Maidment is Vice-Chancellor 
of Auckland University, New Zealand, and Bill Deakin, after 
being parachuted into Yugoslavia and winning the D.S.O. for 
his exploits with Tito's partisans, later became the first Warden 
of the newly created St. Antony's College in Oxford. 

With such a large organization as B.S.C., there was always 
the danger of leakages, particularly among the junior staff. 
Stephenson used to impress upon the secretarial personnel the 
need for care in this respect; he made a point of seeing that they 
got good living quarters in Manhattan; and they in turn were 
content to live comparatively limited social lives in view of their 
work. There were only two cases of anything approaching 
serious indiscretions, although fortunately these did not cause 
any substantial harm. 

On the other hand, the precautions taken by the various 
London headquarters in sending out officers were sometimes 
wrapped in unnecessary mystery. Benn Levy, for example, was 
not given the address of the B.S.C. offices in Rockefeller Centre, 
though this was undoubtedly known to the Germans. Instead, 
he was told to memorize a certain telephone number, which he 
was to call as soon as he arrived in New York and say, 'This is 
Mortimer*. He remembered the number correctly, but he 
forgot his cover name. This is . . .* This is . . .* he kept saying 
after he had dialled the number. Finally he blurted out, 'This 
is Benn Levy'. That's quite all right*, answered a voice at the 
other end of the line. "We've been expecting you. Come right on 
up.* He was then directed to Room 3603, 630 Fifth Avenue. 



183 

Of course, It was sometimes difficult for the senior members 
of Stephenson's staff to conceal the true nature of their activi 
ties, particularly when they encountered friends from former 
civilian life. The present writer, for example, had been on terms 
of intimacy with the witty Irish poet and autobiographer, Dr. 
Oliver St. John Gogarty, in Dublin, and after Gogarty came to 
live in New York, which he did shortly before the outbreak of 
war, it was inevitable that sooner or later their paths should 
cross. Indeed this happened and their former close friendly 
relations were resumed. For a long time Gogarty never showed 
by the slightest hint that he was aware of what I was doing* 
Then one night I invited him to a small dinner party which I 
gave in my apartment. Besides Gogaity, the only other guests 
were from B.S.C. 

In the course of the evening Gogarty asked for a sheet of writ 
ing paper. He scribbled away for a minute or two, and then 
handed me the result, saying to the assembled company, C I think 
you will all like this 9 . It was a limerick, which read as follows: 

A lady of doubtful nativity 
Had a fanny of great sensitivity 
When she sat on the lap 

Of a Nazi or Jap 

She could detect Fifth Column activity. 

Needless to say we were all highly amused, as ako was 
Stephenson, to whom the original manuscript was subsequently 
presented. He in turn passed it on to the President's adviser, 
Ernest Cuneo, and no doubt it caused some hilarity when it 
was recited in the White House. 

Stephenson also had many willing helpers outside B.S.C., 
who put their own resources and facilities at his disposal. 
Prominent among them was the Canadian Charles Vining, 
President of the Newsprint and Pulp and Paper Associations 
of Canada; also Ms old flying comrade from the First War, 
Tommy Drew-Brook, the Toronto stockbroker* Then there 
was the Hungarian-bom British film producer Sir Alexander 
Korda, who had got Ms knighthood (so it was said) because 
Winston Churchill was so struck by the picture Lady Hamilton* 
based on Nelson's life story, wMch Korda made in six weeks in 
1941. It is true that the Prime Minister saw this film eight 
times and was reported to have cried on each occasion; 



184 

doubtless he was also impressed, as was Stephenson, by Its 
propaganda value, since Britain also stood alone for a time in 
the Napoleonic Wars and in Nelson's death and victory at 
Trafalgar had another 'finest hour 5 . Korda also played an 
active part in advising on the production of films for political 
warfare such as The Lion Has Wings and Desert Victory. 

On one occasion, when eastbound transatlantic flights were 
heavily booked for many months ahead by top priority 
passengers, Stephenson managed to get Korda a passage in 
a Liberator bomber at short notice. At Dorval Airport in 
Montreal, a smart young R.C.A.F. officer fitted the film 
director with an inflatable life jacket. 

In answer to his inquiry as to the purpose of this article of 
equipment, the officer said: 'It will keep you afloat for twenty 
hours, sir! 5 

It was mid-winter, intensely cold and blowing a gale. Korda 
was not impressed. 'But I do not want to be kept afloat for 
twenty hours/ he remarked somewhat plaintively in his 
characteristic Hungarian accent. 

Korda did not enjoy the flight sitting on a parachute in an 
unheated bomb bay. He was unable to adjust his oxygen mask 
properly with the result that but for the prompt action of a 
fellow passenger who noticed his heavy breathing and change 
of colour he would undoubtedly have been asphyxiated. (As 
a reward for saving his life, Korda gave him a well-paid job 
with not too much to do in his film company's London office 
after the war.) 

Stephenson himself often made the uncomfortable journey 
by bomber during the war. In December, 1943, he took his 
friend Ernest Cuneo to London in a Liberator. It was Cuneo's 
first war-time visit, and while the aircraft was en route across 
the Atlantic Stephenson asked him what he would most like to 
do or see during his tour of Britain. Cuneo replied that the 
greatest thrill he could possibly experience would be to meet 
*the great man, Churchill 3 . Stephenson said he would arrange it* 

On their first day in England, Stephenson arranged for 
Cuneo to visit an American Air Force Group which was 
stationed in Lincolnshire. As Cuneo departed by car for the 
air-force station, Stephenson set out on foot from Claridge's 
Hotel to keep an appointment at No. 10 Downing Street with 



the Prime Minister. It was a lengthy visit, as Churchill had 
many other callers, also friends of Stephenson, such as Lord 
Beaverbrook and Lord Leathers, and so the hours passed. 
Eventually Stephenson left about 3.30 a.m. and began to walk 
back to his hotel. 

At the corner of Brook Street and Grosvenor Square, he 
recognized a familiar figure engaged in conversation with two 
young American Air Force officers. It was Cuneo. 

c Come along, Ernie/ said Stephenson, after he had greeted his 
friend. e We are going to call upon the Prime Minister at No. io/ 

'Good God, Bill,' the astonished Cuneo replied. Don s t you 
realize it is four o'clock in the morning and we cannot possibly 
break in on the great man at this hour? Why, he may be asleep/ 

'The whole of the forces of Britain are engaged in one way 
or another at this moment, and some of my own people are at 
this very moment dropping into enemy territory/ Stephenson 
remarked with apparent unconcern. 'Why then do you think 
that their leader should be sleeping at his post?* 

By contrast, Cuneo was in a rather emotional state, having 
just returned from witnessing the departure on bombing 
missions of a number of United States Air Force personnel, 
with whom he had dined at their station in Lincolnshire, and 
having later watched the arrival back of the Squadron some 
what depleted as the result of action over their target. However, 
he agreed to come along. 

When they reached Downing Street, they announced them 
selves and to Cuneo's surprise were immediately shown into a 
room where the Prime Minister was enjoying a well-earned 
drink with several of his colleagues. ChuretuE greeted the two 
newcomers warmly. 

'Cuneo,' said the Prime Minister raminatively, as the name 
struck a chord in his memory. 'Are you, by any chance, related 
to the Cuneo who served as navigator to Christopher Columbus?* 

Cuneo's chest swelled with pride. Yes, indeed, he was a 
direct descendant of that famous Genoese sailor, he assured 
Churchill. Thereafter the visitor and the Prime Minister took 
to each other in the warmest possible fashion. 

As they took their leave and with the first rays of the dawn 
retraced their steps to Claridge's, Stephenson asked the 
American what had impressed Mm most about Churchill. 



i86 

Cuneo answered that It was his clothes. 'I was astonished to 
find this great Marshal of the Allied Forces dressed in such a 
simple garb as an overall. 5 

Actually the Prime Minister was wearing his c siren suit' in 
case of enemy air raids, or his 'Zip* as he preferred to call it. 

Next day Stephenson took his American friend to lunch with 
the Mountbattens in their penthouse overlooking Hyde Park. 
Lord Louis Mountbatten (as he then was) was the much-talked- 
of British Chief of Combined Operations and again Cuneo was 
suitably impressed particularly as he made a comment which 
greatly amused the company and was so often repeated after 
wards that it became something of a classic. 

The conversation turned on Mussolini and someone remarked 
that at least he had made the trains run on time. 'Yes,' Cuneo 
agreed, 'but perhaps the Italians would prefer that they didn't! 5 

Another diverting incident occurred at this lunch, which is 
worth recording. The other guests included the Foreign 
Secretary, Anthony Eden, who was seated beside Stephenson. 
During the meal the Minister made a whispered inquiry in 
his neighbour's ear as to the identity of his expansive American 
friend. Stephenson thereupon explained that Cuneo was a 
trusted adviser of President Roosevelt and a good friend of 
Britain, who was doing an excellent job in Washington as 
liaison between the White House, O.S.S. and British Security 
Intelligence in the United States. Eden expressed satisfaction. 

As they were leaving, the Foreign Secretary took Mount- 
batten aside and asked in an undertone who Stephenson was. 
'Why,' said Mountbatten in surprise, 'don't you know? He's 
your man in New York.' 

As one of President Roosevelt's confidential advisers, Cuneo 
had an opportunity of observing something of Stephenson's 
role as an intermediary in certain high-level negotiations 
between the British Prime Minister and the U.S. President. 
In this connection his opinion of Stephenson is worth recalling. 
'He always knew what neither of them could ever give/ Cuneo 
has said. 'Therefore the other never asked. He cut out the 
customary rigmarole whereby one statesman says to another: 
"If I asked you this in public, what would you say?" * 

One of the more delicate subjects of a top-secret character 
which Stephenson had to clear personally with President 



i8 7 

Roosevelt deserves a brief mention here. This was a project of 
strategic deception of the enemy in the shape of the body of a 
dead man which it was arranged should be released from a British 
submarine near the coast of Spain, where it would be washed 
ashore. The corpse was conveniently provided with faked 
plans of a 'second front 5 and had the desired effect upon the 
Germans, to whom the papers were passed by the Spanish 
authorities. Commander Ewen Montagu, the naval intelligence 
officer in charge of the operation, visited New York to discuss 
it with Stephenson and later gave a vivid account of its 
execution in his book. The Man Who Never Was. 1 

Another war-time acquaintance of Stephenson was Noel 
Coward. Stephenson, who had made Coward's acquaintance 
early in the war and was greatly impressed by his abilities, 
wished to employ him on propaganda and other secret work 
in the Western Hemisphere. Plans were made accordingly and 
Coward was preparing for his new job after spending the 
winter of 1940-41 entertaining the troops in Australia and 
New Zealand, when the news was broken to him by cable as he 
stopped at Bermuda on his homeward journey, that it was not 
to be. 'A greater power than we could contradict has thwarted 
our intents,' Stephenson informed him laconically. 

Some of Coward's fiiends said it was because he had made 
a slighting remark about the Prime Minister's son Randolph at 
a dinner party and the news had got back to *the old man*. 
However, it is extremely unlikely that Churchill would have 
concerned himself in a proposed personal appointment of this 
kind, although he probably would have felt (if his attention had 
been drawn to it) that Coward could be better employed 
devising and acting in theatrical and variety entertainment for 
the benefit of the British and Commonwealth armed forces. 
The truth is that Coward had many enemies among c the 
Establishment', who for one reason or another objected to his 
official employment. At all events for Coward it was a bitter 
disappointment and as he subsequently was to admit, it cost 
him some black hours. But things probably worked out for the 
best, for if the job with Stephenson had materialized, he would 
never have written Blithe Spirit and In Which We Sme* 

1 The incident was also described In fictional form by A. Buff Cooper 
(Lord Norwich) in Operatsm Heartbreak* 



i88 

Noel Coward did a wonderfel war-time job on the entertain 
ment side, which in the fairly lavish distribution of honours and 
awards afterwards did not seem to receive the recognition it 
deserved. But Stephenson always recognized his worth. He 
also treated him with characteristic kindness. Seeing him 
suffering from the after-effects of influenza while passing 
through New York at Christmas, 1943, after a particularly 
exhausting tour of the jungle camps in the Middle East and 
India, Stephenson packed him off to his property in Jamaica 
so that he could recuperate quickly in the tropical sunshine. 
It was Coward's first visit to Jamaica, and it led to his ulti 
mately making a home there. 1 

Stephenson himself worked incredibly long hours at his war 
time job, and his staff often wondered when he slept. At two 
o'clock one morning, during the New York 'dim-out', he was 
observed by the night shift leaving his office, and it was 
assumed that he was going to bed. But he did not stay there for 
long. At three-forty-five he telephoned from his apartment in 
Dorset House, which was not far away, to say that a chink of 
light was showing under one of the blinds. At five he was back 
at his desk, having bathed, shaved, and changed his clothes, 
ready for the next day's work. 

On D-day in June, 1944, Stephenson, who was determined 
to be in on the launching of the 'second front', flew as a rear 
gunner over the invasion coast. Harking back to his days as a 
fighter pilot in the First World War, he was annoyed because 
he encountered no German aircraft to shoot at. But he could 
derive some satisfaction from the fact that the successful 
military operation which was just beginning, and which was 
eventually to throttle Hitler's forces, owed much to his own 
efforts and to the efforts of the brave people who had passed 
through his organization. 

2 

A country that is extremely heterogeneous in character offers 
a wide variety of choice in propaganda methods. While it is 
possibly true to say that most Americans are intensely suspicious 
of propaganda, it is certain that a great many of them are 
remarkably susceptible to it, even in its most patent and blatant 
1 Noel Coward. Future Indefinite (1954), pp. I94> *72* 



form. It is unlikely that any propagandist would seriously 
attempt, with any prospects of success, to influence politically 
the people of Britain or France through the medium of astro 
logical predictions. Yet in the United States this was done under 
Stephenson's auspices with effective if limited results. 

In the summer of 1941, Louis de Wohl, a Hungarian who 
had been well-known as an astrologer, was sent over to the 
United States by Stephenson's London headquarters. But, 
while he was to be controlled by Stephenson, Ms instructions 
were that he must never mention Britain or show in any way 
that he was especially interested in Britain's welfare* His 
mission was to shake American public confidence in the 
invincibility of Adolf Hitler. 

It was planned that the first prophecies which de Wohl 
would make on his arrival in the United States should coincide 
and harmonize with prearranged astrological and magical 
predictions of Hitler's fall to be made in other parts of the 
world. By this means it was hoped not only to convince the 
public but to alarm Hitler himself, who was intensely super 
stitious and a great believer in astrology. Accordingly, when 
de Wohl arrived in New York, Stephenson arranged a press 
conference for him at which the astrologer told newspapermen 
that Hitler's horoscope showed that his fall was now certain. 
The planet Neptune, he said, was in the house of death, making 
for a mysterious fate, and soon the progressed ascendant would 
be in a place where Neptune was at the moment of Hitler's 
birth. That very summer, de Wohl added, Uranus would 
bring the birth constellation into effect with grave consequences 
for Hitler. 

A few days after these statements had appeared in the news 
papers, other stories began to emanate from elsewhere. In fact, 
the arrangements which had been made were working smoothly. 
In Cairo a newspaper published in Arabic carried a statement 
by the eminent Egyptian astrologer, Sheikh Youssef Afifi, who 
was reported as saying: 

Four months hence a red planet wil appear on the eastern 
horizon and will indicate that a dangerous evil-doer, who has 
drenched the world in blood, will pass away . . . This means 
that an uncrowned Emperor will be killed , and that man is 
Hitler. 



i go 

At the same time steps were taken so that this story was duly 
picked up by American correspondents in Egypt. 

Simultaneously correspondents in Nigeria filed a story which 
told of a report by a local District Officer in a remote district 
up country. It appeared that a priest called Ulokoigbe had 
seen a vision. In the priest's own words: 

In the light, I saw a group of five men on a rock. One was 
short, with long hair; the second was fat and shaped like the 
breadfruit; the third monkey-faced and crippled; the fourth 
had glass in his eyes like the District Officer; the fifth was 
leopard-faced. After a quarrel the fifth vanished. The cripple 
stabbed the breadfruit man in the back. The long-haired one 
cursed the glass-eyed one and pushed him from the rock. Then 
the cripple jumped from the rock leaving Long Hair alone. 
Long Hair seized the crown from the rock, but it did not fit 
his head and fell off. In a wild rage Long Hair slipped from 
the rock and fell shrieking like a madman. The crown was 
left in its proper place in the middle of the rock. 

This easily recognizable description of Hitler and his principal 
lieutenants (Goering, Goebbeis, Himmler and Hess) also 
appeared in the American press. People then began to sit up 
and take notice. Stephenson carried the matter further, and in 
order to enhance de Wohl's reputation, it was arranged that 
he would make a prophecy which would be actually fulfilled 
ten days later. After consulting the stars and B.S.C. the 
astrologer told the press that within the next ten days one of 
Hitler's allies would be found to be mad. Sure enough, inside 
the following week or so, a French naval officer who had 
escaped from Martinique was quoted as stating in Puerto Rico 
that the Vichy French Governor of the French West Indies, 
Admiral Robert, had become violently insane and could be 
heard shouting and screaming all night. 

De WohPs public was considerably impressed. He really 
seemed to know what he was talking about. Here was a prophet 
who made a prediction in New York which was immediately 
confirmed, first by an Egyptian astrologer in Cairo, and 
secondly by a Nigerian priest in the jungles of Africa. Further 
more, he had definitely said that within ten days one of Hitler's 
allies would become mad, and so it proved to be with Admiral 



Robert. Certainly the astrologer's reputation shone as brightly 
as the stars of which he spoke. 

After this auspicious beginning in New York, the astro- 
philosopher, as the newspapers called him, toured the country, 
and at public meetings, over the air, in widely syndicated 
articles for the press, he declared that Hitler's doom was 
sealed. Later, he delivered similar attacks upon the Vichy 
French Ambassador, Henry-Haye, and upon the isolationist 
Colonel Lindbergh. At the annual convention of the American 
Federation of Scientific Astrologers, which opened in Cleveland 
on August 5, 1941, de Wohl said of Lindbergh that he was part 
of the plague of technology which makes the weak-minded 
believe that a man who can handle machines well must be an 
authority on things of the spirit. 

As for Hitler, he had shot Ms bolt. (Roosevelt, on the other 
hand, had a 'beautiful horoscope'.) 'Hitler's move on Russia 
was a great mistake 5 , de Wohl told the convention, going on 
to point out that the date on which the German High Command 
decided to attack Russia was May n, 1941, the same date on 
which Rudolf Hess landed in England. 'This is significant', he 
observed, 'because Dr. H. Spencer-Jones, the British astron 
omer, scoffingly remarked in 1938 that if there was anything 
to astrology, its students should be able to predict important 
events for May u, 1941.* He continued: "Hitler is on the 
downgrade. The turning point came when Germany invaded 
Czechoslovakia in March, 1939. We can't predict a date for 
Ms defeat, but if the United States enters the war before nezt 
spring, he is doomed.' 

Astrologer de Wohl returned to England after Pearl Harbour, 
having accomplished a fantastic but effective mission. 

3 
Besides the collection of secret intelligence directly concerned 

with the prosecution of the war, Stephenson succeeded ^in 
gleaning valuable information about internal American politics. 
It was based as a rale on statements of fact privately made, or 
views and intentions privately expressed, by the President 
himself, by his advisers and members of his Administration, 
such as Cuneo and Donovan, this information being willingly 
passed to Stephenson in the knowledge that it would reach 



1 92 

the highest quarters in London. 

Incidentally, Cuneo not only belonged to the President's 
Brain Trust, but was in a sense its co-ordmator as well as its 

link with Stephenson. At this period the Brain Trust included 
such men as Adolph Berle, Francis Biddle, Tom Corcoran, 
Morris Ernst, Harry Hopkins, Lowell Mellett, David Niles 
and Bob Sherwood. 

Two examples may be given here. On the day after the 
Japanese attack on Pearl Harbour, Stephenson informed 
London of the losses and casualties which the President was to 
announce to Congress on the following day. 'At any rate 5 , 
Roosevelt was reported as saying, c this will be a salutary lesson 
to the Navy not to be too free with their criticism of the 
British.' The source of this information was Donovan, who had 
been received by the President at midnight on December 7/8, 
1941, after one of the most hectic and exhausting days ever 
remembered at the White House. c To think that all our planes 
were caught on the ground", the President continued in outraged 
indignation, as Donovan suggested a scheme for emergency 
defence of the Philippine beaches. 1 

Another example concerned Russian tactics in Washington. 
In April, 1944, Stephenson reported that the U.S. Navy and 
particularly the Commander-in-Chief Admiral King were 
strongly opposed to the active lobbying by the Russians for the 
extension of Lend-Lease for three years after the end of the war 
and 'assistance to establish a large navy'. The pertinent query 
came from King, 'Who are they going to use this goddamned 
fleet against? 3 

Through analysis of the intelligence available to him from 
his various sources, Stephenson was enabled to provide London 
with reliable forecasts of future events, such as the results of 
the Presidential elections held in 1940 and 1944, which were 
forecast with remarkable accuracy. In this context he reported 
at the beginning of February, 1944, that 'Roosevelt has under 
taken to the Party that he will jettison Wallace as Vice- 
Presidential candidate 3 , notwithstanding that Henry Wallace 
was himself unaware of this until within a few days of his 
rejection by the Democratic Convention five months later. 

Roosevelt's Republican opponent in the 1944 election, 

1 John Gunther. Roosevelt In Retrospect (1950), at p. 352. 



Thomas E. Dewey, was considerably Influenced by the electoral 
analyses carried out in the country by the American Institute of 
Public Opinion, or the Gallup Poll, as it is commonly known. 
No doubt he was encouraged by the fact that Dr. George 
Gallup, who headed this organization, was himself politically 
a Republican. Unfortunately for Dewey, the Gallup polls did 
not prove a reliable guide on this occasion, at least not in the 
earlier stages of the election, since they had Dewey in the lead 
almost until the last minute. It was later suggested that Gallup 
deliberately adjusted his figures in Dewey's favour in the hope 
of stampeding the electorate thereby. But this was quite 
untrue. The margin of error was a genuine miscalculation, 

Meanwhile, In London, the British Prime Minister was 
naturally most interested in the result of this election, which 
came at the final critical stage in the war. Stephenson was 
accordingly asked to provide an independent forecast and he 
turned to Donovan for assistance In preparing c a clinical 
analysis' of election trends. Donovan cleared the project with 
the President, who likewise expressed interest in. the result. He 
then handed it over to David Selferheld, a statistical expert 
with one of the most analytical minds In Q.S.S. and asked Mm 
to re-evaluate the Gallup forecasts. The result was a finding 
that Gallup was 4 per cent, out In his calculations. In fact, 
Seiferheld correctly forecast the result In every single state 
except one. 

This sensational information was passed to Stephenson by 
the President's adviser, Ernest Cuneo, who also acted as liaison 
between O.S.S. and Stephenson's organization. 

'It's unbelievable', Cuneo told Stephenson, 'there are going 
to be some whltefaced boys in this country. . . . Dewey Is calling 
up Gallup so often they have to have a clerk to answer him. 
Imagine a guy shaking so much!' 

'And Gallup is trying to give Dewey service s I suppose?* 

'Sure, he's one of Gallup's principal clients. 5 

A week before the election Stephenson sent the following 
telegram to London, laughingly telling Cuneo as he did so that 
he * would be branded either an Idiot or a genius 5 . 

My estimates have consistently coBiicted markedly with 
those of Gallup and other pollsters and political pundits . . 



and now show even greater divergence from largely accepted 
view than previously . . . 

My current analyses indicate victory for FDR in minimwn repeat 
minimum of 32 states with yjo electoral votes and maximum of 40 
with 487 electoral votes . . . 

Dewey minimum comprises North Dakota, South Dakota, 
Nebraska, Colorado, Kansas, Wyoming, Vermont and Iowa 
. . . Maximum includes foregoing plus Maine, Idaho, Wisconsin, 
Indiana, Michigan, Ohio, Minnesota and Illinois . . . Last four 
are Dewey's most doubtful ones and not improbable result 
anticipates his losing three or all four. 

The results of the election were exactly as Stephenson had 
predicted. Dewey won all the eight states listed as his minimum, 
together with four of the remainder listed as possible gains. 
Roosevelt carried 36 states, with 432 electoral votes, although 
his popular vote was considerably reduced, the majority being 
only 3,000,000, the smallest in any presidential election since 
1916. 

Another prediction made by Stephenson concerned the 
important New York municipal office of Mayor. Early in 1944 
he predicted that Fiorello La Guardia would not run again 
and that the next Mayor would be William O'Dwyer. At this 
time it was widely accepted that La Guardia would go forward 
again and almost taken for granted by the press. Eighteen 
months later O'Dwyer was elected by the largest majority in 
the city's history. 

In regard to the Gallup polls, it is only fair to add that, 
despite occasional errors such as happened over the last 
Roosevelt election, Stephenson had a healthy respect for them 
and regarded their findings as more often than not extremely 
accurate. He was also aware that the Roosevelt Admimstration 
made covert use of them. For this purpose, Gallup's organiza 
tion was employed to obtain answers to specific questions, and 
these were handed to the Presidential speech-writer, Judge 
Samuel Rosenman, who would pass them on to the President* 
There is no doubt that they exercised a considerable influence 
on the political strategy of the Administration. Much of the 
information gathered by the Gallup pollsters was made 
available to Stephenson through the co-operation of David 
Ogilvy, a brilliant young Scotsman, who had been one of 



Gallup's associate directors and had made himself an expert 
on American public opinion. 

Ogilvy was perhaps the most remarkable of the younger men 
to join Stephenson's B.S.C. This he did in 1942, shortly after 
his thirtieth birthday. It was a fortunate step for him; he later 
admitted that Stephenson had changed the course of his life. 
Not that his previous career had been unvaried, or for that 
matter easy. He had once worked as an assistant chef and 
washed dishes in the kitchens of a big Paris hotel, a job which 
he later exchanged for the equally hard one of selling cooking 
stoves from door to door in Scotland. Anyone who is familiar 
with the canny Scots housewife will appreciate that this was 
no sinecure. Yet Ogilvy turned out to be the company's top 
salesman and went on to write sales manuals before crossing 
the Atlantic to study American advertising techniques on 
behalf of his brother's advertising firm in London. Finding 
America what he called 'the most wonderful, delightful, 
marvellous country on earth 9 , he promptly resigned Ms job 
with his brother's firm to become Dr. Gallup's right-hand man 
in Princeton. In conducting more than four hundred nation 
wide surveys for Gallup, he gained a solid grounding in the 
methods of opinion research as well as a profound respect for 
it for purposes of advertising. (This experience was to stand 
him in good stead after the war when he started his own 
advertising agency in New York, which in an astonishingly 
short time became one of the most successful and spectacular 
concerns of its kind on Madison Avenue. *The man in the 
Hathaway shirt*, 'the diplomat who sent his son to Grotoa 
with money he saved buying Austins 5 and c Commander 
Edward WMtehead, Schweppesman exfraoidinary* were all 
manifestations of OgHvy's peculiar genius.) 

Thus, when the time came, Ogilvy was able to arrange for a 
series of polls to be conducted at Stephen&on's behest with the 
object of analysing the exact state of American public opinion 
towards Britain. These revealed, among other desiderata, that 
the defeats which Britain suffered in the earlier part 0^1942 
were having a most damaging effect on the American attitude 
to Britain and to the Roosevelt Administration. For example, 
it appeared in mid-February, 1942, that 63 per cent, of the 
American pubHc believed that the British were doing all they 



could to win the war. Three weeks later this figure had fallen to 
49 per cent., the lowest point to which British prestige had sunk 
since the beginning of the war. Furthermore, the reports showed 
that there was a loss of confidence in the U.S. Government; one 
American out of three now believed that the United States, 
and therefore the Roosevelt Administration, was not doing its 
utmost to gain decisive victory over the enemy. 

Before Pearl Harbour, as has been seen, Stephenson's organi 
zation successfully spread covert propaganda, designed to 
strengthen the interventionist groups throughout the country 
and discredit the isolationists. As soon as the United States 
formally entered the war, the first of these operations became 
superfluous. But B.S.C. continued to analyse the publications 
and broadcasts of former isolationists, and it found that, as the 
bellicose spirit created by Pearl Harbour subsided and the Allies 
continued to suffer crushing defeats, so the isolationist press 
was encouraged to print anti-Roosevelt, anti-British, anti- 
Russian and anti-Semitic propaganda of increasing vehemence 
and in increasing quantity. There seemed to be a deliberately 
concerted pattern in these attacks. An anti-British theme would 
appear in one organ and be taken up by another until it had 
spread throughout the country. The New York Daily News, for 
example, was urging in February, 1942, that the bases in the 
Western Hemisphere, which the British had leased to the U.S. 
in 1940, should be 'confiscated', in case some day they should 
play the same part as the Japanese mandated islands in the 
Pacific had played in the Pearl Harbour attack. Thus the Daily 
News at once appealed to American acquisitiveness, stigmatized 
Britain as a potential enemy of the U.S. and opened up a vista 
of future wars. 

Evidence of deliberate isolationist activity was confirmed by 
the records of an interventionist society called 'The Friends of 
Democracy', to which B.S.C. had access and which together 
with other relevant facts and figures were embodied under 
Stephenson's direction in a series of memoranda entitled Fifth 
Column Propaganda of the Axis in the United States. They analysed 
all the tricks which the isolationists were using and showed that, 
while much of their propaganda was devised by native Ameri 
cans, much was dictated by Germans, either through propa 
gandists like Viereck or through short-wave broadcasts. They 



showed how the same themes were used throughout the country 
in a manner which implied a consistent policy guided by a single 
group. 

The first volume of Fifth Column Propaganda, which covered 
the period from December 7, 1941, to January 24, 1942, was 
handed by Stephenson to Donovan. After he and the leading 
members of his staff, such as Robert Sherwood and Archibald 
MacLeish, had digested it, the document was then passed 
to President Roosevelt, on whom it made a considerable 
impression. Indeed the President had not realized how wide 
spread and how purposeful this propaganda was, for hitherto 
no official U.S. agency had been engaged in studying it. On 
February 23, 1942, the President delivered a speech to the 
nation, in which for the first time he denounced the s rumour- 
inongers and poison-peddlers In our midst*. Prompted by Sher 
wood and MacLeish, he made use of a number of ideas which 
the report contained, and one long paragraph in his speech 
was directly inspired by it. 

Thereafter the President's advisers, particularly those 
attached to the Donovan organization, requested Stephemon 
to pass them a copy of each memorandum as it was completed. 
On the President's instructions, a vigorous counter-attack was 
launched. Edmond Taylor of C.O.I, used the reports consis 
tently through the campaign, while Joseph Barnes, Sherwood's 
chief assistant, handed numerous extracts from them to the 
Mew York Herdd-Tribune> which embodied them in a series of 
articles. Every night for a week, C.B.S., drawing its information 
almost exclusively from the reports, devoted its principal news 
periods to talks on enemy propaganda and did the same with 
its coast-to-coast programme, 'Report to the Nation*. Dozens of 
articles, editorials and cartoons along similar lines followed. 
Finally, Archibald MacLeish's Office of Facts and Figures 
issued a booklet, which the author had obviously written with 
the reports on his desk, analysing Axis propaganda themes and 
showing the public how to detect them. 

Having thus prepared public opinion for more direct action, 
the President was enabled to deliver a series of frontal attacks. 
A large number of the propaganda organs employed by isola 
tionists and Axis sympathizers were banned from the mails, 
among them being Father Coughlin's Social Justice and William 



198 

Dudley Pelley's The Galilean, X-Roy and Publicity. Their pub 
lishers, with the exception of Coughlin whose indictment might 
have offended Catholic voters, were arrested and thirty-three 
of them were indicted at the largest treason trial in American 
history. 

As the campaign against the fifth columnists continued, 
Stephenson was able to see how its progress was affecting 
American public opinion. The results, as polled by Gallup, 
were most gratifying. On March 1 I, 1942, only 49 per cent, of 
the American people thought that Britain was doing her utmost 
to win the war. Six weeks later, on April 23, this proportion had 
jumped to 65 per cent,, although no important naval or military 
victory had occurred during this period to influence the public 
in Britain's favour. 

His knowledge of Gallup's methods led David Ogilvy to the 
conclusion that a poll, if secretly organized in other countries, 
could assist in settling many political and ethnological problems 
without the confusion and possible corruption of a plebiscite. 
The results of such a poll, conducted in Spain at any time during 
the war, might have been used not only to guide British policy 
towards Franco, but also to determine what types of allied 
propaganda would be most effective. By the same means it 
would have been possible to assess the true strength of such 
political movements as the Integralist in Brazil or Sir Oswald 
Mosley's Fascist Black Shirts in Great Britain. 

These ideas were set out in a report, entitled A Plan for 
Predetermining the Results of Plebiscites, Predicting the Reactions of 
People to the Impact of Projected Events, and Applying the Gallup 
Technique to Other Fields of Secret Intelligence, which was written by 
Ogilvy and forwarded by Stephenson to London in August, 



Although it was received without enthusiasm at the time, 
both by the British Embassy in Washington and S.I.S. Head 
quarters in London, the fact remains that a year later the 
Psychological Warfare Board of General Eisenhower's Head 
quarters staff successfully carried out polls in Europe in the 
manner advocated by Ogilvy and endorsed by Stephenson. 
Since those days the U.S. Government has also made con 
sistent use of Dr. Gallup's techniques, both overtly and 
secretly. 



199 



Throughout most of the war Stephenson was able to maintain 
effective relations with the American press, usually through 
intermediaries, and on occasion it was able to render him and 
the British cause most valuable service on the basis of material 
supplied by his organization, for example, by exposing the 
activities of the Vichy French. This liaison was desirable for 
two reasons, first, because there were occasional items which 
London wished to be placed in American newspapers, and 
secondly and more important newspapermen often pos 
sessed exclusive information about affairs which they could be 
persuaded to divulge provided they were kept supplied with 
similar information from Stephenson J s sources. 

Although Stephenson's office was in touch with all the 
principal journalists and feature writers in America, Stephen- 
son himself was much attracted by two. These were Walter 
Lippmann, the shrewd commentator on foreign affairs, who 
wrote for the New Tork Herald-Tribune syndicate, and Leonard 
Lyons, whose gay and effervescent column on people and 
affairs ( c ln the Lyons Den*) appealed to Stephenson's of 

humour. One evening, when the present author was in New 
York's celebrated Stork Club with Stephenson,, he asked the 
quiet Canadian why he was so partial to Lyons. Stephenson 
replied, with a twinkle in his eyes: 4 Len is always constructive 
and so kind and gentle that I feel I should be around to pro 
tect him from the big bad wolves!' 

It is also pertinent to recount something of Stephenson's 
dealings with two other top-ranMng columnists who were {and 
still are) very much part of the American scene Walter 
Winchell and Drew Pearson. Both were in their early forties 
at this time, and so huge was their readership and audience 
which they commanded in their columns and broadcasts that 
they could make, as well as break, a man. Hence the deference 
with which they were treated by all alike, from the President 
downwards. They were generally feared because of their 
enormous power, and as a result they were exceptionally well 
informed of what was going OB in America. They were, there 
fore, obvious though delicate sources for Stephenson to tap. 

Winchell was a New Yorker, who had left school at the age 



200 

of thirteen for the stage, had graduated from vaudeville to 
theatrical journalism, and had become a dramatic critic, 
dramatic editor and eventually a columnist for the New York 
Mirror. His column, which was syndicated through more than 
800 newspapers, was read by well over twenty-five millions 
daily, or one in every five or six of the entire population of the 
United States. There was no Senator or Representative whose 
constituents were not reached by his writings, and since 
Congressmen like votes, they were obliging to WinchelL 

A Winchell column consisted of between twenty and fifty 
separate references to individuals or events. He wrote seven of 
these columns each week, intimate, important, airy or dis 
concerting notes about people and things. Thus a typical war 
time column might contain as its principal feature a forthright, 
and possibly courageous, denunciation of some native-born 
fascist enterprise. But it would also include a score or so of 
minor items, ranging from a stroll of Marlene Dietrich along 
Fifth Avenue to a note that Mr. Fishbein, the gooseberry king, 
was about to be divorced from Mrs. Fishbein. 

Among WinchelFs friends was J. Edgar Hoover, who supped 
with him on occasion at the Stork Club, and was even indebted 
to him for the capture of the notorious gunman and Labour 
union racketeer, Louis (Lepke) Buchalter, whose gang had for 
years dominated New York's garment district and had forced 
the baking industry alone to pay them an estimated $1,000,000 
for protection. Lepke surrendered through Winchell, because 
he knew that the G-men would not shoot him at sight, if he 
were in the company of so celebrated and influential a personage 
as the columnist. As the result of a radio appeal by Winchell, 
the gangster gave himself up to Hoover in person at a rendez 
vous previously arranged by Winchell at the comer of 28th 
Street and Fifth Avenue, New York City, on the understanding 
that his civil rights would be respected by the F.B.L Sentenced 
to a fourteen-year term on a narcotics charge in 1941, Lepke 
was turned over to the New York State authorities two years 
later to stand trial, with two associates, for the murder of a 
Brooklyn storekeeper, for which crime he was duly convicted 
and sentenced to death. At the beginning of March, 1944, he 
was reprieved for the sixth time by the Governor of New York, 
Thomas E. Dewey, who was soon to become Republican 



201 

candidate for President, and Stephenson sent the following 
telegram to London: 

Lepke reprieved forty-eight hours . . . Dewey is faced with 
complex situation for personal decision. He is progressing 
towards practically certain Republican nomination . . . Lepke's 
statement (which is being retained by Dewey in extreme 
secrecy) implicates important New Dealers ... If worthwhile 
Dewey again reprieving Lepke for the purpose of deferring the 
final great expos6 until just before election time, so that he 
may produce a knockout blow for the President at the crucial 
moment. 

Presumably the maximum amount of information had been 
extracted from Lepke as this turned out to be his last reprieve. On 
March 2, 1944, he died in the electric chair at Sing Sing prison. 

When President Roosevelt entertained Winchell at the White 
House, he opened the conversation, according to Winchell, by 
saying: 'Walter, here's an item for you.' Bundists, America- 
Firsters, Coughlinites and all the lunatic fringe of American 
isolationism probably concentrated more sheer hatred on 
Winchell's sleek grey head than upon that of any other one 
man. It is noteworthy that several of them went to jail or were 
indicted on charges of traitorous or treasonable conduct as a 
result of his disclosures. It is hardly necessary to add that his 
income was enormous he himself boasted that he had 'salted 
away a couple of million' or that he went in constant fear for 
his personal safety. The country estate to which he retired by 
day to sleep, bristled with sirens, electric eyes and other up-to- 
date forms of alarm. 

Nevertheless Winchell was always a stout-hearted patriot, 
and he did his best to further the Anglo-American war effort 
by every possible means. To this end he asked a mutual friend 
to supply him with relevant factual information from time to 
time. The data which he requested was in fact obtained from 
Stephenson's office. Thus not only was Stephenson able to 
place items in Winchell's column, but on occasion he was able 
to supply him with 'copy 5 for a part or even the whole of the 
column itself. This happened, for example, in October, 1943, 
when the Argentine Government released on parole between 
thirty and forty of the crew of the German battleship GrafSpee, 
who had been interned, in breach of its agreement. 



202 

A column of over a thousand words was written, beginning: 

The following is an exclusive exposure of the attempt of the 
Argentine Government to send reinforcements to the Nazi sub 
marine fleet . . . Every statement made can be proven . . . 
Of the facts I am sure. ... 

This is an exclusive report to the people of the United 
Nations of a pattern of treachery of DELIBERATE INTER 
NATIONAL treachery which has already stabbed one good 
neighbour in the back and threatens the life-lines of every 
other nation battling the Axis . . . The Victim: Brazil . . . 
The Criminal: the gov't of Argentina . . . 

This is the second time that the Ramirez Government has 
broken its word of honour . . . We cannot shake the hands 
of men who are helping to send our flag to the bottom of the 
sea, while our fellow Americans are dying to keep it flying in 
the sky . . . 

The article was handed to Winchell through the mutual 
friend and was subsequently published in its entirety. Further 
more, Winchell drew attention to it in his regular Sunday 
evening broadcast. After the Argentine Ambassador had been 
prompted by this to issue a public denial, the text of another 
column reached Winchell from the same source, and it likewise 
appeared in full. The following is an extract: 

'Impossible and barbaric 9 is the quote of the Argentine Embassy 
about my broadcast and column . . . The phrase is too valuable 
to drop because 'impossible and barbaric' exactly describes 
the President of the Argentine. Here are the facts . . . 

South American radio stations picked up the Winchell broad 
cast and relayed the story throughout the sub-continent. The 
result was that President Ramirez decreed that the crew of the 
Graf Spee were to be 'concentrated in small groups, which will 
be under the supervision of the Army and Navy'. 

On another occasion, following a personal request from 
President Roosevelt to assist him in preparing public opinion 
for the drafting of army nurses, a complete column on the war 
effort of British women as an example to their American sisters 
was written in Stephenson's office. Here is how it began: 

British Women Orchids to Some Gallant Ladies 
Britain is the ONLY country that has conscripted women for 
the fighting forces . . . Of about 16,000,000 women in Britain 



203 

between the ages of 14 and 59, over 7,000,000 are in the 
services or in paid employment ... Of the single women 
between 18 and 40, 9 out of every 10 are in essential war work; 
the rest are either physically unfit or engaged in taking care 
of younger brothers and sisters or elderly parents . . . 467,000 
are in the services; 56,000 are doing full time civil defence 
work; 6| million are in industry. 

The story was published by Winchell as it stood, and on the 
day it appeared it was an extremely fortunate coincidence that 
Representative Emanuel Celler of New York should ask 
permission in the House to read it in full into the Congressional 
Record. The Speaker granted the Congressman's request. It 
was good publicity for the British contribution to the war, 
which was not infrequently under-estimated in the United 
States. 

Again, in December, 1944, when public opinion in America 
was beginning to favour a lenient peace with Germany, 
Stephenson provided a useful piece entitled 'Humanity v. the 
German people'. It was a cogent argument against leniency, 
based on the facts of Hitler's bloodstained record. Once more, 
Winchell published it in toto, and what is more, he followed it 
up with three more articles on the same theme written by 
members of Stephenson's staff. Many Americans were pro 
foundly influenced by these indictments, and little was heard 
thereafter about the desirability of 'soft' peace terms for 
Germany. 

Finally, in January, 1945, the President asked for some 
details which might assist in the preparation of a National 
Service Act. Once again a suitable column was written for 
Winchell. It began: 

Things I Never Knew 

(About the National Service Act in Great Britain) 

That British people who cherish their personal freedom just 
as much as we do wasted no time in trusting their Government 
when the nation was in danger. 

The article went on to explain how the act worked in England 
and how for the past four and a half years the Minister of 
Labour had been empowered to direct anyone to perform any 
service required, not just some persons, but all persons rich 
and poor alike. 



204 

Probably no man was closer to the President during the war 
years than Harry Hopkins, and it was fitting that he should pay 
Winchell a well-deserved tribute when the war was over, with 
which Stephenson incidentally warmly agreed. 'I don't know 
of anyone in semi-public life who stuck by Roosevelt as 
devotedly as did you', Hopkins wrote to him in July, 1945. 
*You really fought against Hitler when it was none too popular 
and I think you deserve all the credit in the world for it. A 
more timid person would have backed away from that one.' 1 



To those who knew him during the war, Andrew Russell 
Pearson appeared a tall, tight-lipped individual, looking un 
comfortably like a horse, a resemblance which was increased 
by his habit of snorting as he spoke. A Quaker from Illinois, 
he was occasionally heard addressing members of his family as 
'Thou' and 'Thee 5 . He had received a more formal education 
than Winchell, having graduated from Swarthmore College 
(Phi Beta Kappa and other societies) and having travelled 
widely before settling down in the capital to write his celebrated 
'Daily Washington Merry-Go-Round' he had previously 
been a lecturer in geography and a successful foreign cor 
respondent* His first wife was a Polish Countess. The garden 
pool of his Washington house in Dumbarton Avenue was 
stocked with goldfish bearing such names as Harry Hopkins 
and Harold Ickes. The cows on his Maryland farm were 
similarly christened Cordell Hull, Henry Morgenthau, Ed. 
Stettinius and Eleanor Roosevelt. Cordell Hull was ^slaughtered 
in the spring of 1945 and eaten by Pearson and his family with 
relish. 

Washington was Drew Pearson's beat. Cabinet Ministers, 
Senators and Congressmen were his friends. His methods of 
extracting information and rewarding his informants were 
similar to those employed by Winchell, although Pearson 
regarded himself as a much more serious reporter than his 
colleague, because he dabbled to a smaller extent in preg 
nancies, divorces and infidelities. Actually, he was less per 
ceptive than Winchell, in spite of his superior education, and 

1 Sherwood. II, 907. 



205 

certainly far less reliable. He had a marked indifference to the 
feelings of others, and was quite unperturbed if one of his 
disclosures cost a friend or acquaintance his job. 

Pearson kept extensive records, both in his head and on his 
files, of the misdemeanours of important public men, mainly of 
politicians in Washington. He knew which Senators and 
Representatives had been financially 'taken care of 5 by big 
business lobbyists, and which had been unfaithful to their wives. 
Moreover, he was said to be adroit at hinting that he would not 
use the information, if they made a point of telling him now and 
again what was going on in their offices or departments. For 
example, he was said to have in his possession an affidavit 
signed by a railroad sleeping-car conductor vouching for the 
alleged homosexual activities of a well-known Washington 
political figure. 

Before the war Pearson had a collaborator, Robert S. Allen. 
But after Allen joined the army, Pearson continued alone. The 
column was started in 1932, just after Pearson and Allen had 
published their book, Washington Merry-Go-Round. 90,000 copies 
of this work were sold, and Washington society was badly 
jarred by what the authors had to say of the private lives of its 
leading citizens. The book's success led Pearson and Allen to 
publish a daily column of similar character and with the same 
title. This column was even more popular and before long was 
appearing in more than six hundred newspapers with a reader 
ship of over twenty millions. Indeed it was second only to 
WinchelFs in its influence on the public mind. During the war 
years, when it was written by Pearson alone, it lost none of its 
popularity, while in addition Pearson's Sunday evening broad 
casts, which were made just two hours before Winchell's, had 
an estimated audience of 15,000,000. 

Despite the changes which the President made from time to 
time in the Administration, Pearson contrived to remain in 
direct touch with at least three Cabinet Ministers at any given 
moment. For example, he was always able to telephone or visit 
several Cabinet Ministers. From these and other sources he 
obtained first-hand reports of all Cabinet meetings and on 
occasion he would quote in his column the actual words used 
by the President or a passage of dialogue which had occurred 
between Ministers during a session. 



206 

In Britain, of course, he would have been prosecuted at once 
for violating the Official Secrets Act. In the United States he 
was immune, provided that he did not publish information 
which might have caused the loss of American lives. Like 
Winchell, he was careful to foster the friendship of Edgar Hoover, 
and at suitable intervals went out of his way to praise him. His 
foresight paid him well. Once, Cordell Hull was so angry with 
Pearson that he swore to expose both him and his sources. 
Hoover was, accordingly, instructed by the White House to 
penetrate Pearson's intelligence system. 'Of course 5 , Pearson 
casually admitted afterwards 'Hoover came along and told me 
about it. So I was able to take the necessary precautions/ 

Although Pearson was a staunch New Dealer and an admirer 
of President Roosevelt, the President never liked his column. 
The trivialities which it contained apparently nettled him as 
much as the disconcerting anecdotes about members of his 
Administration. Once, when the President made a journey to 
Warm Springs, the column announced that a standing order 
for Danish pastry, of which the President was allegedly fond, 
had not been cancelled before his departure and that con 
sequently Danish pastry was piling up high at the White House. 
Twenty-four hours later, three high officials paid separate visits 
to Pearson's house. Tor God's sake', they said, 'lay off the boss! 
Why are you always attacking him?' And they went on to 
explain that Danish pastry was not, in any case, the President's 
favourite confectionery. On another occasion, Pearson spread 
the story that Roosevelt enjoyed the tune 'Home on the Range'. 
For months afterwards, in consequence, the President could 
not escape 'Home on the Range' whenever he was within ear 
shot of a band. Unfortunately, it was not Roosevelt, but his 
secretary, Marvin Mclntyre, who liked it. Roosevelt detested 
it. 

More serious was a charge of mendacity which the President 
brought against Pearson after a radio talk in which the latter 
declared that Hull wanted to see Russia 'bled white*. Both the 
President and the Secretary of State protested that Pearson was 
entirely wrong, and warned him that such statements might be 
construed as a dangerous affront to an ally. Pearson replied 
that the Russians had long been aware of Hull's 'consistently 
anti-Russian attitude/ and added: 'It didn't take me long to 



207 

tell them about it. However, if the President needed a scape 
goat, I am glad if anything I have said now assists the Adminis 
tration to make it clear in words what certainly was not clear 
before in deeds.' After the President's protest Pearson had large 
placards printed displaying his own profile and under it the 
words: 'The Man the President Called a Liar.* For Drew 
Pearson it was good publicity. 

But even Roosevelt acknowledged Pearson's value at election 
time, and in 1944 he sent Harry Hopkins and the Chairman of 
the Democratic National Committee, Robert E. Hannegan, to 
speak to him. Each of them told Pearson how much the Presi 
dent admired him for his courage, adding that, although they 
had had their differences in the past, the time was too critical 
to allow small personal bickerings to hinder the cause. Pearson 
was delighted and thereafter campaigned ardently for Roosevelt 
and a fourth term. 

Although a good deal of useful information indirectly 
reached Pearson from Stephenson's office in New York, this did 
not produce results comparable with those in WinchelPs case; 
for not only did Pearson refuse to allow anyone else to write his 
column for him but he frequently insisted in putting his own 
interpretation upon the information he received. Nor was it 
possible to prevent him from publishing at the same time a 
considerable amount of anti-British material. This material, 
some of it very violent, came to him from such sources as 
Admiral Leahy, who had left Vichy to become President 
Roosevelt's Chief of Staff, Assistant Secretary of War John J. 
McCloy and others. Pearson did not publish it because he was 
anti-British. He was not. He published it because it was c hof 
news for example, when McCloy told him that he (McCloy) 
believed that Britain was deliberately delaying the launching of 
the second front and no one could stop Pearson from doing 
so. On the other hand, he was dissuaded from publishing much 
that would have been damaging to Britain. A great deal of it 
was proved to be untrue or inaccurate and was discarded by 
Pearson. Much of it also he was talked out of using, on the 
ground that it would be harmful to Anglo-American relations 
and therefore to the common war effort. 

Although Pearson himself had no scruples in publishing 
unauthorized information, he was nevertheless enraged when 



208 

he realized that his own intelligence organization had been 
penetrated. But he never discovered how or by whom this 
was done. Some of the background to this incident may safely 
be revealed now. 

It began on July 25, 1944, with the publication in Pearson's 
column of the greater part of a confidential letter from William 
Phillips, an experienced diplomat, who had been successively 
U.S. Under-Secretary of State, Ambassador to Italy and the 
President's special envoy in India. The letter, which had been 
written from New Delhi in April, 1943, and was addressed to 
the President, with a copy to Cordell Hull, summed ^ up the 
Envoy's impressions of India, and it did not make particularly 
pleasant reading, least of all for the British. 

According to Phillips, India was in a state of inertia, prostra 
tion, divided counsels and helplessness, with growing distrust 
and dislike for the British, and disappointment and disillusion 
with regard to Americans. The British had been completely 
successful in their policy of 'keeping the lid on' and suppressing 
any movement among the native Indians that might be 
interpreted as being towards independence. British armies 
dominated the picture; twenty thousand Congress Party 
leaders remained in jail without trial. Phillips also remarked 
that it was hard to discover, either in New Delhi or in other 
parts of India, any pronounced war spirit against Japan, even 
on the part of the British. Rather, the British seemed to feel that 
their responsibility lay on the Indian side of the Burma- 
Assam frontier. 'Unless the present atmosphere changed for the 
better', he added, fi we Americans should have to bear the 
burden of the coming campaign in that part of the world and 
could not count on more than token assistance from the British 
in British India.' 1 

The publication of these criticisms caused a considerable 
stir, and was strongly resented in Britain. Sir Ronald Campbell, 
the British Minister in Washington, immediately sought an 

1 Hull. II, 1493-4- According to Sherwood's account of the Teheran 
Conference in November, 1943, which is based on the Hopkins Papers, 
Roosevelt, at his first private meeting with Stalin, 'cautioned Stalin against 
bringing up the problems of India with Churchill, and Stalin agreed that 
this was undoubtedly a sore subject. Roosevelt said that reform in India 
would have to begin from the bottom and Stalin said that reform from the 
bottom would mean revolution.* Sherwood. II, 772. See also Churchill. V, 
306. 



aog 

interview with Cordell Hull, at which he lodged a strong 
protest and requested the U.S. Government authorities to issue 
a statement dissociating themselves from the views expressed in 
the letter. Subsequently, on instructions from the Foreign 
Office, Campbell called upon Eugene Meyer, the publisher of 
the Washington Post> and made a formal complaint to him as 
well. As it happened, this was of little or no avail, since the 
Post was only one out of 616 newspapers in which the offending 
column had appeared and in any event it exercised no control 
over Pearson. However, the Minister reported his conversation 
with Meyer in a secret telegram to the Foreign Office. To his 
intense surprise, the substance of what he had cabled to London 
was faithfully reproduced in Pearson's column a few days 
later. Thus it looked as if Pearson had somehow or other 
managed to obtain a copy of the original telegram from the 
British Embassy. 

It was an intolerable situation. Cordell Hull was determined 
to find out who had given Pearson the text of Phillips's letter, 
and the British Embassy began to search for chinks in its own 
security. Meanwhile Stephenson set to work, and early in 
August he discovered that Pearson had received a copy of the 
letter from an Indian. Further investigation during the ensuing 
three weeks revealed that the individual was an Indian 
nationalist named Chamal Lai. 

There still remained the matter of the Embassy telegram. 
Towards the end of August, Stephenson was asked by London 
to offer all possible assistance to the Embassy in its inquiries, 
since other serious leakages had come to light. For instance, 
Senator Albert B. Chandler of Kentucky had been able to 
quote in a speech to the Senate the exact text of a cable from 
Sir Olaf Caroe, the Secretary to the External Affairs Depart 
ment in New Delhi, to the India Office in London describing 
Phillips as persona non grata with the Government of India. 

Within the next week Stephenson was able to send a full 
report to the Embassy, showing that the leakages were occurring 
through the Washington office of the Agent-General for India, 
and naming those implicated. As a result, Major Altaf Qadir, 
Third Secretary of the Agency and an ardent nationalist, 
was obliged to leave the country. He had been borrowing 
telegrams from the Agency's files and passing them to Pearson 



2IO 

and Senator Chandler as anti-British, Indian nationalist 
propaganda. 

Pearson's publication of the Phillips letter probably caused 
more embarrassment to official Anglo-American relations than 
any other incident of its kind during the war. After Campbell's 
initial protests, Hull sent the President a memorandum to the 
effect that it was the State Department's feeling that fi it would 
be impossible to issue a statement satisfactory to the British, 
inasmuch as we share in general the views expressed in the 
Ambassador's letter'. The President agreed with Hull's 
suggestion that it would be preferable to make no public 
statement on the subject and that the British Embassy should 
be informed accordingly. But the British did not easily let the 
matter drop. On September 8, 1944, Lord Halifax called on 
Secretary Hull and, in Hull's words, Very pressingly urged 
that the President at an early press conference refer to the 
Phillips letter without mentioning it and speak well of the 
Indian military forces, and then correct any impression that 
the British were not aiding in the war against Japan'. 1 

Although the President did not do this, he did join with the 
British Prime Minister a week later in making a joint statement 
at the Quebec Conference that all nations concerned with the 
war in the Far East and South-East Asia were 'ardent' to 
engage against the Japanese the massive forces they were 
marshalling. Tar from shirking this task,* as Churchill later 
put it, 'the British Empire was eager to play the greatest 
possible part in it. We had every reason for doing so. Japan 
was as much the bitter enemy of the British Empire as of the 
United States. British territory had been captured in battle 
and grievous losses had been suffered.' Churchill thereupon 
offered that the British main fleet should take part in the major 
operations against Japan under United States Supreme 
Command, an offer which was immediately accepted by 
Roosevelt as Commander in Chief. 2 

* Hull. II, 1495. 

* Churchill. VI, 134-5. 



CHAPTER VIII 



FINALE 



BESIDES the Vichy French and the Italian missions, Stephen- 
son's agents succeeded in penetrating Japanese and Spanish dip- 
lomacyin the Western Hemisphere by covert means. At the same 
time others maintained contact with various foreign exiles and 
helped them to organize Tree' groups in order to strengthen the 
resistance movements in the enemy occupied countries. In partic 
ular, B.S.C. worked closely with the Poles, Czechs, Hungarians, 
French, Austrians, Norwegians, Italians, Germans, Danes, Jugo 
slavs and Dutch; also with the Spanish Republicans and Basques. 

Notwithstanding language and other difficulties, Stephenson 
had reliable contacts inside the Japanese Embassy in Washing 
ton and the Japanese Consulates in New York and San 
Francisco, and from their reports, corroborated by other 
outside sources, it was evident some months before Pearl 
Harbour that the militarists in Tokyo were bent upon war. 
An incident in the middle of 1941 showed that the Japanese, 
in the event of hostilities with the United States, were preparing 
to transfer their espionage headquarters in the Western 
Hemisphere, which operated under diplomatic cover, from 
the United States to Argentina. From a source inside the 
Argentine Foreign Ministry Stephenson learned that two 
minor Japanese diplomats were being moved from Washington 
to Buenos Aires, and their real job Stephenson had reason to 
believe was espionage. In fact, they and their party had already 
sailed, and one of them, Hirasawa by name, was known to 
have been implicated in the forced resignation of Kichisaburo 
Nomura as Foreign Minister in 1939 and the supremacy of 
pro-Axis elements in the Japanese Foreign Office. 

As a result of Stephenson's prompt action, Mr. Hirasawa and 
his friends were removed from their ship when it called at 

211 



212 

Barbados, and from there they were flown to Trinidad, where 
Stephenson's representative had made suitable arrangements for 
their reception. On arrival in Port of Spain they were interro 
gated, photographed and searched, while their fingerprints were 
also taken. They were found to be carrying a number of British 
and American technical publications of value for intelligence 
work, maps upon which the locations of British and U.S. naval 
bases in the Western Hemisphere weremarked,listsof Hirasawa's 
contacts and about $40,000 in U.S. notes, of which $15,000 
were concealed in the lining of Mrs. Hirasawa's handbag. 

Not unnaturally they claimed diplomatic privilege. But their 
diplomatic status was questioned, since it had been ascertained 
in the meantime that the Argentine Government had refused 
to accredit them, ostensibly because the personnel of all 
diplomatic missions in Buenos Aires was limited in numbers. 
However, Japan proceeded to evade this restriction by 
promptly raising its mission to the rank of an Embassy, and 
eventually the Argentines agreed to accept them. But by this 
time the British, as well as the Americans whom Stephenson 
had informed, had no intention of letting them go. After much 
discussion, they were taken under heavy guard by sea to 
Halifax. Here they were further interrogated by the R.C.M.P., 
assisted by the F.B.L, and following protests from the Japanese 
Government, they were finally repatriated to Japan accom 
panied by forty-seven pieces of baggage but minus their 
$40,000, their maps and their technical publications. 

In the middle of November, 1941, the deceitful Japanese 
special envoy Saburo Kurusu arrived in Washington, As 
Japanese Ambassador in Berlin he had signed the Tripartite 
Pact with Germany and Italy. His present mission was to try 
to push the United States into accepting Japan's overlordship 
in the Orient, and if and when that failed then to lull the 
Americans into a false sense of security with peace talk until 
his military masters were ready to strike. In this he was 
supported by the weak-kneed Ambassador Nomura, formerly 
Japanese Foreign Minister. 

Stephenson had some success in penetrating the Kusuru 
mission with one of his agents who was a British subject and had 
spent fifty years in Japan and spoke the language fluently. 
This agent made contact with the envoy's secretary, whose 



213 

name was Yuki, and had a series of meetings with him in a 
Washington apartment which had previously been wired for 
recording conversations. He spoke to YuM of Ms love for the 
Japanese and told him that he felt he could use his influence to 
persuade Lord Halifax and the British Government to prevail 
upon the United States to appease the Japanese war lords. 

The information obtained from the recordings was translated 
and transcribed and copies were sent by Stephenson each day 
to President Roosevelt. For the President it provided additional 
confirmation of Japan's attitude and of her future intentions 
which were becoming more and more alarming as each day 
passed, and it supplemented the Japanese diplomatic telegrams 
between Tokyo and Washington, which had been known to 
the American authorities for some time through the skill of the 
American cryptographers in breaking the Japanese codes and 
ciphers. 

On November 27, the President sent his son James Roosevelt 
to Stephenson with a special message, the purport of which was 
not as yet known either to the British Foreign Office or to the 
British Embassy in Washington. The same day Stephenson 
telegraphed it to London. His telegram read: 

Japanese negotiations off. Services expect action within two 
weeks. 

This news produced a considerable stir in the Cabinet 
offices in London and confirmation was immediately sought 
for it. The Foreign Secretary sent an urgent personal cable to 
the Ambassador in Washington, asking whether he knew 
anything about a report of expected Japanese military action, 
which had just come in. Lord Halifax happened to be out 
hunting in Virginia when the cable arrived it will be remem 
bered that the Germans had dubbed him TallyhoHfax' at the 
time of his visit to Hitler in 1938 and he was now obliged to 
get off his horse and hurry back to the Embassy to cable his 
reply that he knew nothing of such a report. Another urgent 
cable was sent from London, this time to Stephenson, informing 
him that the Prime Minister and the Cabinet would be most 
interested to know the source of his information. Stephenson 
answered briefly: The President of the U.S. A. 5 

Two days later Cordell Hull saw Halifax and gave him the 



214 

news officially. 'The diplomatic part in our relations with Japan 
is virtually over/ he told the British Ambassador. 'The matter 
will now go to the officials of the Army and Navy . . . Japan 
may move suddenly and with every element of surprise.' 1 

How the surprise came just over a week after this interview 
is a matter of history. 

It was now presumed that the Japanese would be unable to 
conduct much espionage in the United States, since their 
intelligence system before Pearl Harbour had been based 
exclusively on their Embassy and Consulates, as has been seen, 
and there was no evidence that they had made arrangements 
in anticipation of the day when these would be closed beyond 
transferring its direction to the Argentine. Indeed it is a 
remarkable fact that, so far as is known, only one agent in the 
United States continued to convey intelligence to the Japanese 
after Pearl Harbour. 

This woman was called Velvalee Dickinson, who kept a dolls' 
shop in New York and had acted as a Japanese agent before the 
outbreak of war. After her arrest, in 1944, she told the F.B.L that 
her late husband had been paid $25,000 by the Japanese Naval 
Attache, Ichiro Yokoyama, on November 26, 1941, to furnish 
information to the Japanese. But all the evidence pointed to Mrs. 
Dickinson and not her husband as the recipient of this money, 
particularly as she had previously had another $35,000 in respect 
of services rendered to the Japanese Naval Intelligence Service. 

It was Stephenson who first put the F.B.L on Velvalee's trail 
when he gave Hoover the text of one of her letters, which had 
been intercepted by the Bermuda censors. She used to transmit 
her intelligence in plain language code which, like her dolls, 
was of Japanese manufacture, and it was contained in letters 
addressed to intermediaries in the Argentine. For example, *I 
just secured a lovely Siamese Temple Dancer, it had been 
damaged, that is tore on the middle', meant C I have just secured 
information about a fine aircraft carrier, it had been damaged, 
that is torpedoed amidships'. (This was the U.S.S. Saratoga.} 
Similarly, the meaning of I could not get a mate for this Siam 
dancer, so I am redressing just a plain ordinary doll into a 
second Siam doll', was 'They could not get hold of a sister ship, 
so a plain ordinary warship is being converted into a second 

* Hull. II, 1088. 



aircraft carrier'. Unfortunately the letter intercepted at Bermuda 
gave no clue to the identity of the writer, since it was unsigned 
and the address on the back of the envelope was that of a woman 
who, when subsequently questioned by the F.B.I., swore she 
had not written it; nor for that matter did she know anyone in 
Buenos Aires. The same negative result was obtained in the case 
of several similar letters which fell into the hands of the F.B.I. 

Then Mrs. Dickinson made a stupid mistake. Hitherto the 
return mailing addresses which she used had been selected at 
random from street directories and they belonged to persons 
she had never heard of. But in a moment of spite she used the 
name and address of a woman with whom she had had a 
quarrel. When asked by an F.B.I. agent if she had any idea of 
who might have used her name, the woman thought for a 
moment and replied: Til bet it's that Velvalee Dickinson in 
New York. I bought some dolls from her and because I couldn't 
pay her right away she's been after me with some nasty letters.' 

Comparison of letters written by Mrs. Dickinson with the 
Bermuda intercepts showed that they had been composed on the 
same typewriter, and she was arrested on espionage charges. 
Since these charges would have been difficult to establish by 
circumstantial evidence alone, the U.S. Attorney handling the 
case decided to drop them and instead to accept her plea of 
guilty to violating censorship regulations. As the judge told her 
in passing a comparatively mild sentence, she was lucky not 
to have been tried and convicted as a spy, for in that event she 
would certainly have been sentenced to death or at least life 
imprisonment. 1 

Mention has already been made of the various minority 
groups of foreign exiles with which Stephenson's organization 
was in touch. For instance, it was through the Spanish Repub 
licans and the Basques that he was able to penetrate the 
Spanish Embassies in Washington and Caracas. 

Penetration of the mission in the United States was effected 
by the good offices of General Jose Ansensio, who had been 
Spanish Military Attache in Washington during the Spanish 
Civil War and headed a small group of Spanish Republicans in 
the U.S. His people first of all suborned the butler and the chief 
messenger at the Embassy, with the result that both of these 

1 Whitehead, 164. 



2l6 

individuals were able to produce useful material, which included 
copies of papers from the Ambassador's desk and specimens of the 
Embassy seals and rubber stamps. A little later one of the typists 
who worked in the cipher room of the Embassy agreed to co 
operate. The Secretary who was in charge of the safe where the 
cipher books were kept in a specially locked box when not in use 
had a bad memory, and he was in the habit of shouting across the 
room to his assistant and asking him for the combination. All 
the typist had to do (which she did) was to make a note of the 
numbers and pass them on to her friends. 

Meanwhile, Stephenson's man in Washington discovered 
that one of the janitors employed at the Embassy was a Basque. 
Most Basques had remained loyal to President Aguirre, who 
had been forced to flee from Spain after General Franco's 
victory, and this one was no exception. At this time Aguirre 
happened to be in the United States and was in touch with 
B.S.C. He readily undertook to approach the janitor, and in 
due course the latter as readily promised his assistance. 

The janitor was given the key to the safe combination, and 
one night, early in 1942, he opened the safe and took the locked 
box containing the cipher books to the wash-room of a nearby 
hotel. Here Stephenson's man was waiting for him in one of the 
lavatories. However, the mechanism of the box proved so 
complicated that when the time came for it to be returned to 
the Embassy it was still unopened. The janitor brought it back 
to the hotel on the following night, and this time Stephenson's 
man had made special arrangements for dealing with it. He 
took it to Stephenson's local office, where a skilled technician 
was soon able to discover its secrets. The box was opened 
successfully, the contents photographed and replaced, and the 
box was then returned to the janitor. In this way His Majesty's 
Government was provided with the means of reading all secret 
diplomatic messages which passed between the Spanish Foreign 
Office in Madrid and the Spanish Embassy in Washington for 
the remainder of the war. 

The Spanish Embassy in Venezuela was also penetrated 
with the help of ex-President Aguirre. Stephenson's repre 
sentative in Caracas had recruited the Spanish Ambassador's 
chauffeur and houseman as an informant. In August, 1942, he 
managed to have this individual presented to Aguirre, who 



was then on a tour of Latin America, which incidentally had 
been arranged by General Donovan at Stephenson's request. 
Aguirre persuaded the chauffeur-houseman to co-operate fully 
with the British. The results were equally satisfactory to those 
obtained in Washington, and two months later the Caracas 
Embassy's cipher books had been similarly dealt with. 



One particular type of agent was operated on occasion 
jointly by Stephenson's organization and his American opposite 
numbers, namely the double agent, as a means of deceiving the 
enemy. Some particulars may be given hereof this peculiar man- 
nerof individual, who has to serve two masters on opposing sides. 

While the use of double agents has been described as the 
ultimate purpose of counter-espionage, it is at the same time a 
risky and very intricate operation. A man or woman who is 
already regularly engaged in espionage on the enemy's behalf 
must be persuaded or coerced to retain his employment but to 
transfer his allegiance to the other side. The choice of the right 
moment to exert such persuasion or coercion is one of the most 
difficult decisions that an intelligence officer can be called 
upon to make. His attempt may fail; and even if it appears to 
succeed, he has to face the possibility that the double agent 
may return to his original master and thus involve the officer 
in the appalling complications of a 'double double-cross 5 . 

If the operation is successfully accomplished, however, the 
results are usually profitable. The potential value of a double 
agent is inherent in his ability to do four things. First, he can 
give information about other agents employed by the enemy, 
about their training, assignments and methods. Secondly, from 
the questionnaire with which he is supplied by his original 
employers he can explain what they want to know and that 
is often an indication of the enemy's strategic plans. Thirdly, 
if properly organized, he renders it unnecessary for the enemy 
to place new and possibly unknown agents in his operational 
area, and consequently makes an important contribution to 
the security of his new employers' country. Lastly, and most 
important of all, he can be used as a channel to convey strategic 
deceptive information to the enemy. It is to this latter end that 



2l8 

double agents must be eventually manoeuvred, for thus they 
play a valuable part in the cover plans for military operations 
of great magnitude. 

The difficulties in exploiting the double agent are many. 
Not the least lies in the personality and character of the man 
or woman concerned. Double agents, with the knowledge 
acquired from working with two opposing intelligence services, 
are fully aware of their own value. While some may change 
sides for genuine ideological reasons or may initially accept 
employment from one side for the sole purpose of assisting the 
other, only too often they are motivated by a desire for money. 
In neutral countries, where it is not always easy or indeed 
possible to apply coercive methods, their demands are frequently 
exorbitant. But even when they operate in a belligerent's own 
country, their wishes must be studied to some extent in order 
to gain their co-operation and confidence, which are essential 
if they are to prove worth while. One of Stephenson's most 
important double agents working from New York, for instance, 
could only give of his best from a luxurious pent-house apart 
ment, the bedroom of which was furnished with the person of 
a famous and expensive French actress. Many of the F.B.I.'s 
troubles with double agents, whom they tried to run, arose 
from their lack of understanding of the European mind and 
outlook, and from their inability to place in charge of a double 
agent an officer with a background likely to win his sympathy 
and friendship. 

Another difficulty is that double agents are in constant 
danger of being arrested by the local police who naturally 
know nothing of their real purpose. For example, Stephenson's 
representative in Buenos Aires carefully recruited and 'built 
up' a potentially valuable double agent inside the Spanish- 
German smuggling ring operating from Argentina. Unfor 
tunately, just before he could begin to produce information 
of value, he was arrested by the Argentinians on a smuggling 
charge and disappeared. Moreover, as already indicated, 
double agents may set out to penetrate the organization to 
which they have ostensibly transferred their allegiance in order 
to report back to the enemy on its structure, methods and 
intent. Or they may give him such information unwittingly. 
The 'double double-cross* can arise, too, when the enemy 



discovers he has been betrayed and so in return deliberately 
feeds the double agent with misleading information which will 
be accepted as accurate. Finally, double agents cannot be 
used to deceive the enemy unless they are supplied from time 
to time with true and useful intelligence material which they 
are allowed to transmit to the enemy, for otherwise the enemy 
will soon realize that their information is of no value and will 
discard them. But the natural source of such information is 
the Armed Services, and they are often most reluctant to 
release it. 

Conscious of these various pitfalls, the F.B.I, were chary of 
using double agents in the early years of the war. They did, it 
is true, have one notable success in the case of William Sebold 3 
which has been mentioned in an earlier chapter. 1 But their use 
of Sebold as a double agent was very limited, and he was not 
employed as a channel for strategic deception. In those days, 
before Pearl Harbour, Hoover regarded a double agent very 
much as a decoy, whose usefulness was to uncover other 
enemy agents hitherto unknown. Hence, in Sebold's case, the 
need for obtaining the release of pertinent information from 
the Army and Navy did not arise, as he could be kept operating 
with comparatively low-grade material. 

The question was not thoroughly examined before Pearl 
Harbour, because, although Stephenson and Hoover were 
both interested in it, the U.S. Services had not realized its 
importance and were not prepared to give away any informa 
tion. Stephenson had the greatest difficulty at this period in 
obtaining permission for the release of letters containing 
information sent by enemy agents in America; yet it was 
imperative to do so in order to keep the channel of com 
munication open and thus pave the way for the ultimate 
detection of the sender. In April, 1942, he suggested to Hoover 
that the Chiefs of Staff should be invited to set up a joint inter- 
services committee, which would be charged with responsi 
bility for facilitating the production of intelligence to be sent 
to Germany by double agents and of authorizing its release. 
Stephenson followed up this suggestion with a staff paper on 
the care and handling of double agents, with particular 
emphasis on their 'feeding 5 ; and this paper was submitted to 

1 See p. 84. 



220 

the Chiefs of Staff and accepted by them. Nevertheless, as had 
happened in other instances, it was not acted upon consistently 
for many months. For example, an excellent double agent sent 
over by London was almost abandoned by the Germans 
because the F.B.I. were unwilling or unable to produce useful 
information to pass on to him. 

Another difficulty, also of a purely domestic character, arose 
from inter-departmental competition, not to mention jealousies. 
The F.B.I, employed double agents (usually in conjunction 
with B.S.C.). So occasionally did the Army's G.2. Donovan's 
O.S.S. employed more. Naturally each agency kept its 
operations secret from the other, with the result that the F.B.I . 
would sometimes suspect and investigate an agent who turned 
out to be under the control of O.S.S. 

In general, the theory and practice of operating double 
agents was one of the most difficult fields in which Stephenson 
attempted to educate both the F.B.I, and O.S.S., and it is open 
to doubt if they ever mastered the subject completely, especially 
the F.B.I. Nevertheless, as the war proceeded, increasing 
numbers of double agents were put into operation in the 
Western Hemisphere, mostly on Stephenson's initiative, and 
several of them are worth some brief detailed consideration. 

One of the most important was a well-to-do young Yugoslav 
of good family and education, whose code name was 'Bicycle'. 
He hated the Germans who had arrested him and thrown 
him into prison when he was a student in Germany before the 
war, because in the course of student discussions he had praised 
the advantages of political freedom and democratic rule in 
contrast with the Nazi regime. Consequently when he was 
approached by a representative of the Abwekr in Belgrade early 
in 1940, he agreed to work for the Germans, but at the same 
time he got into touch secretly with British Intelligence. As a 
result of careful handling he was 'built up' as a valuable 
source in the eyes of the Germans, and during 1940 and part 
of 1941, he operated successfully between London and Lisbon. 
He was undoubtedly clever and always showed himself 
absolutely loyal to his British employers. Admittedly his 
tastes in clothes, women and entertainment were expensive 
but then the Germans were paying largely for them. The only 
reward he ever asked for from the British was that after the 



221 



war ^ he might be appointed an honorary British Vice-Consul 
in his native Yugoslavia. 

In August, 1941, after performing valuable service in Europe, 
he was sent by the Germans to the United States. The F.B.L 
were advised of his arrival, having already helped to get him 
a passage from Lisbon. However, they insisted on taking him 
over and running him themselves. It was they who set up his 
radio station, composed his messages, and did his coding. 
Stephenson's staff gave advice and supervision whenever 
possible, but was often deliberately bypassed by the F.B.I., 
who were proud of their recent success with William Sebold 
and appeared to resent the advice of their friendly British 
collaborators in this instance. 

The experiment was hardly a success. 'Bicycle' complained 
of the lack of sympathy shown by G-men who controlled him, 
and he was worried by their inability to produce strategic in 
formation for him to pass on to the Germans. The F.B.L, on 
the other hand, disliked his liberal manner of living, and kept 
making the impossible request that he should square up his 
financial affairs and reduce his personal expenses. However, in 
spite of these difficulties, eight letters containing secret writing 
in invisible ink were despatched by him to Germany in the 
autumn of 1941. These were supposed to be passed through 
the Bermuda censorship, but one of them possibly because 
Stephenson had been advised too late to warn the censors 
was picked out and sent to the testing laboratory, where the 
secret writing was fully developed, which of course rendered 
the letter useless for onward transmission. No doubt for the 
same reason the others took much longer to arrive at their 
German destinations than might have been expected. 

Towards the end of the year the Germans instructed 
'Bicycle' to report to Rio de Janeiro. There he saw the Assistant 
Naval Attache in the German Embassy, Commander Bohny 9 
and also the German secret intelligence chief, Alfredo Engels, 
who expressed complete confidence in him and instructed 
him to return to New York and build a short-wave radio for 
communication with Lisbon, Hamburg and Rio. 

Throughout the first three months of 1942, the F.B.L 
passed out messages which purported to come from him over 
his radio, but they gave B.S.C. no copies of these and no 



222 



details concerning their success or failure. 'Bicycle* was not 
even taken to see the radio station which had been built for 
him, with the result that he was in danger of being caught out 
by a snap question from a genuine German agent in America 
or by a request to send a message at short notice. Soon the 
Germans were complaining that his reports lacked 'meat 5 , and 
they began to suspect particularly after the arrest of Engels 
in Brazil that 'Bicycle* was working under control. After a 
strong personal protest by Stephenson to Hoover, the latter 
appointed one of his more experienced officers to take charge 
of the double agent and undertook to obtain a more regular 
supply of suitable information from the armed services. 

In spite of these assurances, Hoover's men were unable to 
shed their original gang-busting methods in handling 'Bicycle 5 . 
For instance, when the Germans sent over some money for 
him, instead of allowing it to reach him without interference 
the F.BJL attempted to draw the courier into a trap, which 
would of course have notified the Germans that 'Bicycle' was 
at least under the gravest suspicion. However, by making 
considerable efforts with the Joint Services Committee, 
Stephenson elicited enough information to keep 'Bicycle 5 at 
work until August, 1942. Then the F.B.L finally decided to 
have nothing further to do with him on the ground that he 
was a liar and was too expensive to justify his retention. In 
fact, 'Bicycle' was an extremely intelligent as well as coura 
geous agent, and it was somewhat unfortunate that he should 
have been spoiled in this way. 

Another double agent, with whom considerable difficulties 
were encountered, although these had nothing to do with the 
F.B.I., was known as 'Springbok'. A German of noble descent 
his grandfather had held a high office at the court of the 
Emperor William I. he knew South Africa well (hence his 
code name) where he had built up a successful business before 
the war. He was also a man of powerful attraction to women, 
judging by the fact that he successfully seduced the wife of the 
B.S.C. officer in whose charge he was for a time. He was sent 
by the Germans to Brazil, where he defected to the British side. 
He operated mostly from Canada and gave most valuable 
information on the structure and methods of the German 
intelligence organization. This led to the arrest, among others, 



223 

of Alfredo Engels and Herbert Von Heyer, the leading German 
agents in Brazil, and also of the spy named Leibrandt in South 
Africa who had orders to assassinate General Smuts and was 
later caught and executed. The main difficulty with "Springbok 5 , 
however, was to get his information back to Germany; and, 
when his intermediary in Brazil was arrested and the Brazilians 
published his name in the course of their investigations, the 
Canadians had to stage his arrest, which they announced had 
been done at the request of the British. 

Other double agents were 'Moonstone', 'Bromo', 'Aspirin* 
(so named for the many 'headaches' associated with him), 
'Lodge', 'Minaret' and Tat J'. When the end of the war came 
in Europe, radio channels were still being operated by the last 
three under control and were in daily contact with the 
Germans. One of the most successful was Tat ]\ 

This particular double agent was a Dutchman, who had 
worked for German intelligence during the First World War, 
had finally settled down in his own country as a dealer in 
radio and electrical equipment. His work brought him into 
contact with the German Zeiss optical instrument manu 
facturers' subsidiaries in Holland, which led to his being 
recruited by the Abwehr in the Hague in 1940. His new masters 
decided that he should be sent to the United States after a 
period of training; and at the beginning of 1942 he arrived in 
Madrid on his way to America. But in Spain he underwent a 
change of heart and came to the conclusion that he could not 
work against the allies of his own country. He revealed his story 
to the Netherlands Consulate in Madrid, which he had been 
allowed to visit on a routine matter connected with his passport. 

The Dutch informed London, who in due course informed 
Stephenson and asked him to arrange if possible with the F.B.L 
to accept Tat J 3 as a double agent to work in the United States. 
Hoover agreed and Tat J' was assisted to get a passage. Unfortu 
nately he went down with a bad attack of pneumonia immedi 
ately after his arrival, but on his recovery he was able to provide 
valuable information on the working of the Abwehr in Holland 
and France. However, it was not until 1943 that he was able to 
establish radio contact with the Germans. But from then on the 
quality of his messages developed well, and he undoubtedly 
played a useful part in the general scheme of enemy deception. 



224 

Like so many German agents, Tat J' experienced the usual 
financial difficulties, since payment by funds in neutral countries 
was by no means easy and there were frequent delays before 
this could be effected. Although the double agent was usually 
well 'taken care of in this respect by the British or the 
Americans, he frequently had to pretend poverty in order to 
give credence to this supposed condition. On occasions this 
difficulty would create the ironic situation in which the 
Germans were making every effort to despatch funds urgently, 
while the deception material was held up in order to maintain 
the pretence on the other side that sub-agents could not be 
paid and hence no information was forthcoming. 

On one occasion, towards the end of 1943, the Germans 
advised Tat J that funds would reach him shortly in the form 
of eight rare and valuable postage stamps. A German agent 
was accordingly despatched from Spain to Buenos Aires with 
funds to buy the stamps and send them to New York for Tat J'. 
However, on reaching Buenos Aires, the agent, who was an 
alcoholic, converted the funds to his own use in the local bars 
and finally dropped dead through excess of liquor. A few 
months later, a somewhat nervous individual handed over 
$3,000 to an unknown man in a hotel bedroom in Man 
hattan. The man knew that the funds had reached him in 
contravention of the U.S. Currency regulations, but he was 
under the impression that he was merely assisting a fellow 
refugee in distress. The final recipient of the money was Tat J', 
and it had been despatched by a Frenchman in Spain who had 
been working for the Germans for some years. Incidentally, 
although this Frenchman was only a small pawn in the 
espionage game, it is worth noting that during the war he had 
fleeced the German Intelligence Service by various means of 
eighty million francs. When last heard of he was about to have 
the major part of his takings forcibly removed by the French 
authorities of General de Gaulle* 

Further funds were sent to Tat J' at the end of 1944^7 
means of another German agent who flew from Lisbon carrying 
a diamond tie-pin and ring valued at $6,000. Continued and 
ingenious methods of payment of a similar kind were made 
and were ample proof of Tat JY success as a double agent, 
since they meant that the Germans clearly rated him highly. 



225 

Tat J was still transmitting when Germany capitulated, and 
it was planned that he should continue to do so in the event 
of any possible revival of German clandestine activities. 

There is no doubt that what was done by Stephenson and his 
organization to assist the Americans in establishing double 
agents was well worth while, in spite of difficulties, and that 
excellent deception was practised upon the Germans partic 
ularly in regard to United States war potential. 



One of the duties which Stephenson undertook for the London 
headquarters of both S.I.S. and S.O.E. was to recruit, train 
and despatch agents into enemy territory. There were many 
unforeseen obstacles in the way of fulfilling it. 

Although the United States was the largest potential source 
of recruits in the Western Hemisphere, it could unfortunately 
never be exploited fully by Stephenson's organization. So long 
as American neutrality lasted, the U.S. Government did not 
wish recruits to be drawn from foreign minorities, and it could 
make its wishes effective through the Immigration and Justice 
Departments and the State Department, without whose 
permission it was virtually impossible for a prospective agent 
to leave the country. 

The case of a Bulgar named Alexander Stoyaaoff provides 
an illustration of this difficulty. This man was sent out by 
London to get false papers in America and return to Europe. 
The Immigration authorities, through their own inquiries, 
soon found out that his story was false, and Stephenson had to 
resort to a personal appeal on the highest level before Stoyanoff 
was cleared. Such pressure could only be exercised in excep 
tional circumstances, and a few first-class agents were recruited 
in this way. But to flout the will of the U.S. Government as a 
matter of policy would obviously have been very unwise. 

After the United States entered the war, Stephenson was 
obliged to give an undertaking to the F.B.L not to recruit any 
agents directly in the United States on behalf of his organiza 
tion. A few were indeed recruited on his behalf by O.S.S. and 
sent to England, but this was an arrangement of which 
advantage could be taken only sparingly and very discreetly, 



226 

since O.SJ3. had difficulty in securing a sufficient number of 
agents to fulfil its own needs. The manpower authorities were 
unwilling to allow any fit man of military age to leave the 
country, and a draft board release, without which an exit 
permit could not be granted, was extremely hard to obtain. 

Most of Stephenson's recruiting had, therefore, to be done 
outside the United States in Canada, and to a lesser extent 
in Latin America. Even then the choice was limited, since it 
was found that with a few notable exceptions, such as the 
Yugoslavs, the members of foreign minority groups in the 
Western Hemisphere did not possess enough interest in the 
land of their origin to be prepared to return to it on ao arduous 
and dangerous mission at the sacrifice of their existing comforts. 
Furthermore, many of them had forgotten their native language 
or could speak it only with an accent. Even when suitable 
recruits had been found and trained, Stephenson's difficulties 
were by no means over. Transport was always very tight and 
for a time after Pearl Harbour was virtually unobtainable. 
Party after party was held up. Sometimes as much as three 
months would elapse before an agent reached the United 
States from Latin America. Constant delays in sailing, changes 
in routine, and the multiplication of formalities, to which 
attention had to be given, represented what was perhaps the 
most irksome part of the job of recruitment. For nothing is 
more likely to discourage an agent, to damp his ardour and 
damage his discretion than interruption in his plans for setting 
out upon his mission. 

To make the recruiting procedure consistent with the 
training scheme, and also to take advantage of the improved 
security and discipline which were possible under military 
regulations, Stephenson made arrangements with the Canadian 
military authorities whereby recruits were enlisted into the 
Canadian Army. This procedure worked out very well. It 
meant that men were put into uniform as soon as they had 
been effectively recruited. On completion of their training they 
were sent overseas in Canadian troopships. On arrival at a 
British port they would be discharged by the Canadian Army 
and absorbed by the War Office. Furthermore they were 
entitled to the full benefits of Canadian war-service gratuities 
and army pensions, and in this as in facilitating the whole 



227 

recruiting programme the Canadian authorities could not 
have been more co-operative. 

Thus Canada was by far the most fruitful field of recruit 
ment, and Yugoslav-Canadians the most successful recruits, 
although some of the Italians recruited in Mexico were to 
accomplish outstanding work as leaders of the underground in 
various large Italian cities. 

The training school was established in an old farm at Oshawa 
near Toronto in December, 1941. Here the new recruit was 
taught the importance of accurate observation; and his own 
powers of observation were frequently put to practical test by 
moving or removing objects in his room. He was taught how to 
shadow a man and how to escape surveillance himself; how to 
creep up behind an armed sentry and kill him instantly without 
noise; and how to evade capture by blinding his assailant with a 
box of matches. In the course in unarmed combat he learned 
many 'holds' whose use would enable him to break an adver 
sary's arm or leg, to knock him unconscious or to Mil him out 
right. He was also given weapon training. He learned to handle 
a tommy-gun and to use several different types of revolvers and 
automatic pistols, firing them from a crouching position 
either in daylight or darkness. He was instructed in the 
dexterous use of a knife, which could kill swiftly and silently if 
driven upwards just below the ribs. 

Much of his time was spent in mastering the arts of sabotage. 
He was taught the simplest method of putting a motor vehicle 
out of commission without leaving any trace of his interference. 
He learned how to attach explosives to a railway track or an 
oil tank in a manner likely to cause the maximum amount of 
damage; how to make simple types of grenades as well as other 
explosive and incendiary devices, using material that could be 
easily purchased. Before the course was finished, he could 
make and write with secret inks, use different kinds of codes 
and ciphers for communicating with other agents, and interro 
gate a prisoner to the best effect. He was trained in parachute 
jumping. He took part in night exercises, in which one group 
of trainees would set out to sabotage a specific target, while 
others would be given the task of stopping them; and in 
exercises arranged by the Canadian Air Force, in which a 
raiding party would be dropped by parachute and would 



228 

later carry out a mock attack with air support. Practical tests 
were also conducted in the city of Toronto with the aid of the 
local police, who at the same time were undergoing training 
in counter-espionage and counter-sabotage methods. A selected 
group of police in the counter-espionage squad, for instance, 
unaware that they were dealing with trainees, would be set on 
the trail of men whom they supposed to be genuine enemy 
agents. To pass this test the embryo agent would have to evade 
the police successfully. 

In spite of the difficulties in recruitment, the school trained 
more than five hundred carefully chosen students, and con 
ducted fifty-two courses. The courses were also attended by 
selected Canadian and American military personnel as well as 
by representatives of the F.B J. 3 O.S.S. and O.W.I. In addition, 
as has already been indicated, the school provided O.S.S. with 
all its initial instructors, books and equipment, and when it 
was finally closed down in September, 1944, its entire stock 
was bequeathed to O.S.S., who received it gratefully. Besides 
this, Stephenson had to supply S.O.E. in London with a variety 
of 'toys', as the various implements of sabotage and destruction 
were colloquially known. One of the more curious items was a 
gourd of curare, a dark resinous substance which produces 
instant death when injected into the blood stream. It was 
obtained by one of Stephenson's agents from some up-country 
Venezuelan Indians and forwarded to London in the spring 
of 1942. 

The first agent to be recruited was recruited by Stephenson 
personally on the ship in which he travelled to America in 
June, 1940. He was an Italian, who later rose to become a 
Lieutenant-Colonel in the British Army. He was second in 
command of the Special Operations mission which went into 
Sicily with the first wave of assault troops, and he was instru 
mental in himself recruiting Sicilians for work behind the 
enemy lines. He performed similar missions at Salerno and 
Anzio. In December, 1944, he was parachuted into the country 
near Milan with the object of making contact with and 
encouraging the members of the Committee of Liberation, who 
incidentally had the highest respect for him and took their 
orders from him without question. The capture of Milan, for 
which he deserves much of the credit, was a model operation. 



229 

He led the liberation forces into the city and personally took 
over the Milan radio station. He was later granted the freedom 
of the city, while the British decorated him with the D.S.O. 
and M.C. 

The value of the work performed by agents in enemy 
territory can hardly be overestimated. Without the material, 
communications, training and leadership by the British S.O.E. 
and (after November, 1943) by the American O.S.S., 'resistance 5 
in the enemy-occupied territories would have been valueless 
from the military point of view. To give but one example, 
sabotage on the French and Belgian railways reduced the stock 
of serviceable locomotives to a point where there was an actual 
deficiency in the number required by the Germans at the time 
of the allied landings in Normandy. Between September, 1943 
and September, 1944, sabotage in France alone accounted for 
almost as many as the total number of locomotives disabled 
by air action during the same period. 

In no previous war had the resistance forces, to quote General 
Eisenhower's words, been c so closely harnessed to the main 
military effort', and none appreciated this more than the 
Supreme Commander upon whose shoulders lay the responsi 
bility for the ultimate military success in Europe. In this 
context, Stephenson's contribution and that of the training 
school which he organized was both impressive and effective. 



Late on the night of September 6, 1945, William Stephenson, 
who happened to be on a routine official visit to Ottawa, 
called on Mr. Norman Robertson, Under-Secretary of State 
in the Canadian Department of External Affairs, at his private 
residence. With him he found Mr. Thomas Archibald Stone, 
Counsellor in the Canadian Embassy in Washington. Earlier 
that day Stephenson had heard a story to the effect that an 
employee of the Soviet Embassy had been in touch with the 
Department of Justice through the R.C.M.P., offering to furnish 
information, and he wanted to know whether Robertson knew 
anything about it. As a matter of fact, Robertson did. He told 
Stephenson that the head of the Intelligence Branch of the 
R.C.M.P. had informed him that a man who had given his 



name as Gouzenko and said he was a cipher clerk In the 
Embassy had made such an offer 3 and the intelligence officer 
had asked for guidance as to what action to take. The Under 
secretary had in turn consulted the Prime Minister, Mr. 
Mackenzie King, with the result that the R.C.M.P. were 
instructed to do nothing for the time being for fear of the 
diplomatic repercussions which might arise from a false step. 
("Too hot a potato', the Prime Minister remarked) , although 
this was not to prevent the R.C.M.P, from keeping a watch on 
the Russian. 

Stephenson immediately realized that this man might well 
provide a unique opportunity for obtaining important details 
of the operation of the Soviet intelligence system in the Western 
Hemisphere. He also realized that the Russian's life might be 
in serious danger, if he had indeed defected, since the Soviet 
secret police in the Embassy would undoubtedly attempt to 
'liquidate' him and would almost certainly succeed unless some 
prompt action were taken to protect him. Stephenson therefore 
urged that this consideration far outweighed the risk of any 
political repercussions which might result from giving the 
R.C.M.P. a free hand to deal with the case as they saw fit. The 
Under-Secretary agreed on reflection and telephoned the 
R.C.M.P., informing them privately that the Department was 
prepared to modify its previous instruction in the sense 
suggested by the Director of B.S.C. and adding that Gouzenko 
should be fetched and allowed to say what he wished on the 
following morning. 

The amazing story of Igor Gouzenko has been told by many 
people, including himself, but it is necessary to give a few 
details here so as to clarify Stephenson's part in it. 1 Briefly, 
Gouzenko was a young Russian, aged twenty-six, a graduate 
of the Moscow School of Engineering, who after careful 
screening and training in the Soviet military intelligence 
academy had been sent out to work in the cipher department 
of the Embassy in Ottawa in 1943. He had a wife and young 
son Andrei, who had been allowed to join him in Canada, and 
now another child was on the way. His official duties were 
conducted in a specially sealed-off wing of the Embassy, to 
which not even the Ambassador had access, and he soon 
1 See particularly, Igor Gouzenko, This Was My Choice (1948). 



231 

discovered that his immediate chief, Colonel Nicolai Zaboti% 
the Military Attache, was in charge of a complex and far- 
reaching espionage network in Canada. 

He and his wife were astonished by the living conditions in 
which they found themselves compared with those at home in 
Moscow which they had been told were the highest in the 
world. The sense of personal security, freedom to speak as they 
liked and to look at and where they liked, the surplus of food 
and goods in the shops and supermarkets, the workers driving 
around in their own cars this was the lot of the ordinary 
Canadian, and the lesson was not lost upon Igor and Anna 
Gouzenko particularly when one afternoon Colonel Zabotin 
summoned him to his office and told him that instructions 
had come from Moscow for the immediate recall of Gouzenko 
and his family. A few days later, in response to a request from 
Zabotin pointing out that the Embassy was short of staff, these 
instructions were changed and Gouzenko was ordered to 
remain at his post Tor the time being 5 . But he and his wife 
realized that this was only a reprieve, and so they made up their 
minds that they must somehow contrive to stay in Canada. In 
due course, Gouzenko's successor arrived from Moscow and 
Gouzenko was allowed a few more weeks to explain the work 
to the newcomer. Then came the order to hand over on 
September 6, 1945. 

'This is your chance to do something big for this country and 
yourself, and most of all, for Andrei and the new baby 9 , his 
wife insisted. 'Canada is to be our home. Let us not take 
everything and give nothing. 5 

What Igor Gouzenko determined to give was complete 
documentary proof of the Soviet spy system in Canada. With 
this aim in view, he went through all the secret files, turning 
down the edges of those telegrams and other documents which 
he considered of particular interest. Then, on the evening of 
September 5 the day before he was due to hand over he 
surreptitiously abstracted all the documents which he had 
marked, tucked them under his shirt and quietly left the 
Embassy for the last time. 

It says much for his belief in the democratic processes of the 
country that he went straight to the offices of a local newspaper, 
the Ottawa Journal, and spread Ms precious documents on the 



232 

City Editor's desk. Having explained what they were, he was 
politely told that he should take them to the R.C.M.P. There 
he was told to come back in the morning. 

Next day was an exhausting one as he trudged from office to 
office with his wife and child, seemingly getting nowhere. 
Finally, dispirited and weary, he returned to his apartment in 
Somerset Street, fearful of what might happen since he 
realized that by this time his failure to turn up at the Embassy 
for work coupled with the disappearance of the secret docu 
ments must have been discovered. He therefore appealed for 
help to the neighbours who lived in the same staircase. One 
of them, a sergeant in the Canadian Air Force, called the local 
police, and another took the Gouzenkos in and gave them a 
bed for the night. The police agreed to keep an eye on the 
apartment building. 

Shortly before midnight a party of four men from the Soviet 
Embassy arrived and forced their way into the Gouzenko 
apartment by the simple expedient of breaking the lock. The 
Embassy men were led by Vitali Pavlov, Second Secretary 
and chief N.K.V.D. (secret police) representative in the 
Embassy. The Gouzenkos' neighbours again called the police 
and reported that someone was trying to break into their 
apartment. A few minutes later the police arrived and found 
the Russians rifling the contents. c He left some documents here 
and we have his permission to look for them,' Pavlov prevari 
cated in answer to the police query. After an angry scene with 
the police Pavlov and his men withdrew. 

From the apartment opposite Gouzenko continued to keej 
watch, as he felt the N.K.V.D. men might return. For several 
hours nothing further happened. Then shortly before 4 a.m. 
there was another knock at the door, this time a low careful 
one. 'But whoever it was left before I could identify him/ 
Gouzenko wrote afterwards. In fact, it was Stephenson and 
Stone, who had come to reconnoitre the position. (They 
thereupon returned to Norman Robertson's house and woke 
him up with the news of what had happened in the Gouzenko 
apartment house.) 

Next morning Gouzenko was brought to R.C.M.P. head 
quarters, as arranged, while his wife and child remained 
in the neighbours' apartment under police protection. Not 



233 

unnaturally he showed signs of the strain of the day before 
and indeed he was in a state of extreme nervousness as he 
sat down with the head of the intelligence branch and his 
assistant, an expert of long experience in dealing with Com 
munist matters. 

Gouzenko's first statements seemed so fantastic how Soviet 
agents through contacts in the highest places had been collect 
ing data on the atomic bomb that they were difficult to credit 
until Gouzenko produced the documents he had in his posses 
sion. These consisted of the dossiers of three important agents, 
reports in the handwriting of other agents, a number of notes 
and a selection of some thirty recent telegrams which he had 
decoded. A preliminary survey of this material made it clear 
that the Soviet Union was conducting espionage in Canada on 
a large scale, and that a network of agents, operating inside 
various Government Departments, including the Department 
of External Affairs itself, and the Office of the United Kingdom 
High Commissioner, was being run by Colonel Zabotin and 
the staff of the Military Attache's office. For example, one 
telegram signed e Grant 5 , which was Zabotin's cover name, 
dated July 9, 1945, read in part: 

Alek handed over to us a platinum with 162 micrograms of 
Uranium 233 in the form of acid, contained in a thin lamina. 

The identity of 'Alek' was soon discovered* He turned out 
to be Dr. Alan Nunn May, a British physicist working on 
research into nuclear fission in the Montreal laboratories of the 
Canadian National Research Council. He had been a secret 
Communist and a willing Soviet agent for some time. 

Other agents mentioned in the documents were Fred Rose, 
the only Communist M.P. in the Canadian House of Commons; 
Schmidt Kogan, alias Sam Carr, secretary of the Canadian 
Communist Party; and Miss Kathleen Mary Willsher, who 
was employed in the Registry of the U.K. High Commission in 
Ottawa and had access to the secret and confidential files. 
Miss Willsher, a well-educated graduate of the London School 
of Economics she spoke French, German and some Russian 
in addition to English had belonged to the Canadian Com 
munist Party for the past nine years and passed the information 
she obtained from the registry files to Fred Rose. Mr. Malcolm 



234 

MacDonald, the High. Commissioner, at first refused to believe 
that she had violated the Official Secrets Act which she had 
sworn to observe, and it was not until Stephenson showed him 
the documentary proof of her treachery that he resigned 
himself to the loss of one of his most efficient employees. 

After this preliminary interrogation,, Gouzenko with his 
wife and young Andrei were driven off to a 'hideout' in the 
country, where they were to remain heavily guarded but safe 
from the machinations of Comrade Pavlov and the N.K.V.D. 
When the time came for Anna Gouzenko's child to be born, 
she was taken to a local hospital where she posed as the wife 
of a Polish farmer, while an R.C.M.P. officer disguised himself 
as the farmer, visiting the hospital and talking in carefully 
rehearsed broken English. At the request of the R.C.M.P., a 
complete layette for the baby, who turned out to be a girl 
weighing seven pounds and twelve ounces, was specially 
ordered and sent up from Stephenson's office in New York. 

Gouzenko's interrogation proved a lengthy business, and 
several weeks passed before the whole story had been pieced 
together, supplemented by information from London and 
Washington, since the trail led to Nunn May, who had 
returned to England, and to the United States, where a similar 
network of spies was found to be operating. Meanwhile, 
Stephenson had sent the R.C.M.P. two of his most experienced 
staff to help with the inquiries, while he put his secure tele- 
krypton facilities at the disposal of the Canadians for the 
purpose of communicating with London and New York, since 
there was a danger that the Canadian ciphers had been 
compromised. Incidentally, when one of Stephenson's men 
suggested to Mr. Robertson, the Under-Secretary of State, 
that the case should be given a cover name in all conversations 
and reports concerning it, the Minister pointed at the label on 
a bottle of Corby's Canadian rye whisky which stood on his 
desk and had been sustaining the tired group of men in the 
room henceforward it was to be known officially as 'the 
Corby case 9 . Further to put the Russians off the scent, both the 
R.C.M.P. in Ottawa and the F.B.I, in Washington pretended 
to accede to the Soviet request to apprehend Gouzenko and 
hand him over to them by ostensibly instituting a nation-wide 
search for him in both countries. 



At first, it was intended that concerted action should be 
taken towards the end of November, 1945, but the discovery 
of further evidence of similar espionage in the United States 
caused the Canadians to postpone their contemplated action 
for nearly three months. Meanwhile Zabotin and two of his 
principal assistants, whose recall the Canadian Government 
proposed to demand, anticipated this move by quietly leaving 
the country and taking ship back to Russia. Shortly after 
wards, Drew Pearson, the Washington columnist and candid 
commentator, who had got hold of the story through some 
leakage, the source of which was never discovered, referred to 
it in two broadcasts. This made action imperative, and at 
dawn on February 15, 1946, the R.G.M.P. carried out their 
arrests. At the same time the Canadian Prime Minister 
appointed a Royal Commission consisting of two judges of the 
Supreme Court of Canada to hold a public inquiry into all the 
facts as disclosed by Gouzenko. Shortly afterwards, on March 6, 
the thirty-five-year-old nuclear scientist Alan Nunn May 
was arrested in England, and after a trial at the Old Bailey, 
convicted and sentenced to ten years' imprisonment. Fred Rose 
and the other Canadian were likewise tried in Canada and 
received prison sentences. 

Not only did Gouzenko give evidence at upwards of twenty 
trials, which took place in Canada as a result of his disclosures, 
but his testimony before the Royal Commission was invaluable 
in constructing the most remarkable picture of international 
espionage to be presented in this century. 'You have accom 
plished an historic act,' Prime Minister Mackenzie King told 
him on the day the Commission's Report was published. c The 
people of Canada and the world are your debtors. 5 

In saying this the Prime Minister merely endorsed the 
findings of the Royal Commissioners, Mr. Justice Robert 
Taschereau and Mr. Justice R. G. Kellock, who had stated 
that in their opinion: 'Gouzenko by what he has done has 
rendered great public service to the people of this country, 
and thereby has placed Canada in his debt. 9 It is not so 
generally known that but for the intervention at a critical 
moment of another Canadian, who never sought the lime 
light, Igor Gouzenko might not have been alive to tell his 
dramatic story. 



2 3 6 



With the surrender of Japan in August, 1945, Stephenson 
considered that his official work was virtually over and that it 
only remained for him to wind up his organization before he 
would be free to return to civil life and resume his business 
interests. With the ending of hostilities in Europe, most of his 
staff had already returned to their pre-war jobs or took new 
ones some, like David Ogilvy, John Pepper and Sydney 
Morrell, decided to stay in America and make their future 
careers there. However, Stephenson kept on a few key men to 
help in the Gouzenko case, to which he had to give much of 
his personal attention during the next six months. Consequently 
it was not until the middle of 1946 that British Security 
Co-ordination was formally dissolved. 

What he had achieved did not go unrecognized, although, 
to quote Robert Sherwood, his exploits, like those of Edgar 
Hoover, 'could hardly be advertised at the time'. He had 
already received the honour of knighthood at the hands of 
King George VI. , his name having appeared in the New Year 
Honours List issued from Buckingham Palace in 1945. Towards 
the end of the following year he received the Presidential Medal 
for Merit, America's highest honour for a civilian. The citation 
signed by President Truman has been quoted in reference to 
the e timely and invaluable aid to the American war effort in 
making available to the United States the extensive experience 
and resources of the British Government in the fields of 
Intelligence and Special Operations'. 

The citation had been written by General Donovan, who 
sent it to the President with a covering letter in which he 
described as 'absolutely true' everything that had been 
expressed in it. e just as we have been insistent on the right of 
our country to have an independent secret intelligence service,' 
he added, e so I would like our British colleagues to see that we 
recognize and appreciate the help they can give us.' 

The award was made on the President's behalf by General 
Donovan in a simple ceremony in Stephenson's apartment 
suite in the top of the Hotel Dorset on West 54th Street, New 
York. The General pinned the decoration on Stephenson's 
coat in the presence of his wife and Robert Sherwood, former 



237 

Assistant Director of O.W.I., while Colonel Ned Buxton, who 

had occupied a similar post in O.S.S., read out the citation. 
At the same time Donovan gave him a photograph of himself 
which he inscribed: 

To Bill Stephenson whose friendship, knowledge and con 
tinuing assistance contributed so richly to the establishment 
and the maintenance of an American intelligence Service in 
World War II. 

Bill Donovan. 

He was to receive one other remarkable tribute which must 
be mentioned. This was from the British Labour leader Dr. 
Dalton, under whose Ministry the Special Operations Executive 
had been developed. In 1947 Stephenson and his wife paid a 
visit to London in the course of which they met Dalton, who 
was now Chancellor of the Exchequer in the first post-war 
Labour Government. On his return to New York, Stephenson 
received the following letter ; 

Treasury Chambers, 
Great George Street, 

LONDON, S.W. I. 

sgtk July, IB47- 
MY DEAR SIR WILLIAM, 

It has been a personal pleasure to me to meet you again 
during the past few weeks, and to renew our war-time 
association. 

When I was Minister of Economic Warfare in Mr. Churchill's 
Coalition Government, I deeply appreciated the most con 
spicuous services which you were then rendering in the United 
States to the common cause. The appreciation of our American 
friends was shown by the most outstanding decoration which 
they conferred upon you. 

I should further like to place on record the fact that you 
did all this of your own goodwill, and received no remuneration 
of any kind. This was a very generous and patriotic gesture, 
for which, on behalf of His Majesty's Government, I warmly 
thank you. 

With my kind personal regards, 

Yours very sincerely, 

HUGH DALTON 
Sir William Stephenson, M.C., D.F.C. 

At this time Sherwood was working on his study Roosevelt 
and Hopkins (published in England under the title The White 



House Papers of Harry L. Hopkins) > and the brief passing tribute 
which he paid Stephenson in this work, when he described him 
as *a quiet Canadian', whose activities 'produced some remark 
able results which were incalculably valuable' 5 gave him far 
more pleasure than the more formal compliments which 
accompanied the award of his British and American honours. 

Meanwhile, Stephenson had gone to live in Jamaica, where 
he had bought a property at Hillowton, overlooking Montego 
Bay 'the finest house in the island', he called it. (Incidentally, 
it was his wife's choice.) His example was followed by several 
of his friends, including Lord Beaverbrook, Sir William 
Wiseman, Noel Coward and Ian Fleming, all of whom acquired 
estates on Jamaica's beautiful north shore at this time. For a 
year or so he showed little interest in the outside world and was 
content to enjoy life on this island in the sun. Only gradually 
did he recover his interest in commerce and industry. With some 
of his war-time associates, such as financiers Sir Rex Benson and 
Sir Charles Hambro in London, General Donovan in Washing 
ton, and a number of Canadian and American industrial 
ists like Edward Stettinius, former chairman of the U.S. 
Steel Corporation, he formed the British-American-Canadian 
Corporation, which rapidly developed into the World Com 
merce Corporation, originally designed to fill the void left by 
the break-up of the big German cartels which Stephenson 
himself had done much to destroy. Thus he and his colleagues 
on the board raised an initial $1,000,000 to help 'bridge over 
the breakdown in foreign exchange and provide the tools, 
machinery and "know how" to develop untapped resources in 
different parts of the world'. 

The World Commerce Corporation also played a useful part 
in the development and rehabilitation of economically back 
ward countries. As one American newspaper editorial put it at 
the time, c if there were several World Commerce Corporations, 
there would be no need for a Marshall Plan'. Barter trade was 
facilitated on a massive scale. A typical transaction took place 
in the Balkans in 1951. Yugoslavia and Bulgaria were short of 
dollars and also short of medicinal drugs. But each country had 
about $300,000 worth of paprika on its farms. World ^Com 
merce accordingly exchanged a year's supply of penicillin and 
sulfa for the paprika, which they then sold on other markets. 



239 

While normally working on a commission basis, the Corporation 
would sometimes forgo its profit if it felt it could help an 
impoverished or economically backward country by giving it 
the facilities of its international connections. 

In ^1948, Stephenson was asked by the then Governor of 
Jamaica, Sir John Huggins, to help the island to utilize its rich 
local resources of limestone and gypsum and so make it un 
necessary for the Jamaicans to import cement from England. 
Stephenson agreed in the interests of public service, and he 
accordingly constructed a cement factory at Rockfort, on the 
outskirts of Kingston. Today Stephenson takes justifiable pride 
in the fact that the Caribbean Cement Company Limited is 
probably the most successful undertaking of its kind to have 
been established since the end of the war. Its annual capacity 
of 200,000 tons is now (1962) in course of being doubled as a 
result of an additional 2.8 million investment, 

Soon after Stephenson's factory had begun to produce the 
much-needed cement for Jamaica's housing and public-works 
programme, Mr. Theodore Sealy, the editor of the Jamaica 
Daily Gleaner, visited London and gave a talk on the Home 
Service of the BJB.C. on February 18, 1952. He said: 

Most British thinkers on the Caribbean usually emphasize 
the need for social services. But the British people know from 
their own history that they have been able to purchase these 
services only after they had developed an industrial and com 
mercial economy. It is very wrong, therefore, I suggest, for 
the people of Britain to think that the way to help the West 
Indies is to dress the shop window with social services. 

I much prefer the vision of men like Lord Beaverbrook and 
Sir William Stephenson, the international industrialist, who 
consider that the way to help Britain to raise the standard of 
living in those areas is to put capital in money and goods into 
the development of those countries, to create employment, to 
give more purchasing power. Then definitely out of the fruits 
of these developments will come all the social services which 
our friends in England talk so much about. 

In the spring of 1952, Stephenson undertook a similar task 

in Newfoundland, when he became the non-salaried Chairman 
of the Newfoundland and Labrador Development Corporation, 
whose object was to attract private investment capital for the 



240 

development of mining and other local industries. Or, as 
Stephenson himself succinctly expressed it, 'the ultimate aim 
... is an extra bottle of milk for the Mds of Newfoundland 5 . 

During the next few months Stephenson succeeded in 
interesting eight of the leading mining, industrial and banking 
concerns from outside in Newfoundland's economic possibilities, 
thus making available the many millions of dollars which these 
firms possessed. Then, having worked himself out of a job, he 
resigned. In thanking him for having completed his programme 
so rapidly, the Prime Minister, Mr, Joseph Smallwood, wrote: 
*You achieved a magnificent result in a very short space of 
time, and I and the Government and people of Newfoundland 
must ever be grateful to you.' 

In 1953, Stephenson was approached by an old friend, John 
Archer Dunn, who was a mining engineer and a director of 
the Selection Trust Group of Companies, of which his brother- 
in-law, Sir Chester Beatty, was chairman. Dunn came on 
behalf of the members of the Diamond Syndicate, who were 
extremely worried about the consistent thefts of diamonds from 
the South African mines and the smuggling of these stones, 
particularly those of the industrial variety, into America. The 
Syndicate's emissary was authorized to offer Stephenson the 
sum of one million pounds sterling, together with an additional 
blank cheque to be filled in by Stephenson in any sum he wished 
if he could provide a satisfactory solution of the leak, which 
amounted to something like 100,000 in value from the 
diggings every month. 

It was an unparalleled offer, and its size was an indication 
of the faith the Syndicate had in Stephenson's record of achieve 
ment in the intelligence field. But Stephenson had no hesitation 
in turning it down flatly. 

C I have just emerged from underground activities into the 
light of business, and there I intend to remain, Jack, 5 he told 
his friend. C I don't think you realize what an octopus the 
Syndicate is grappling with. This is not a local affair confined 
to Africa. It is operated by an international murder gang which 
has world-wide ramifications. I am not afraid of it, but I have 
had enough of that kind of job, and I want to have time now 
to sit in the sun.' 

Thus did the former British chief of intelligence decline to 



241 

accept an assignment with an honorarium unique in the annals 
of criminal investigation. It was eventually undertaken as a 
police operation by Sir Percy Sillitoe, the former Director- 
General of the Security Service (M.I.5), though not for the 
sum offered to Stephenson. The subject later formed the back 
ground to one of the best of Ian Fleming's James Bond thrillers^ 
Diamonds Are Forever. (Fleming took his title from the Diamond 
Syndicate's slogan.) 

In his new industrial and commercial interests Stephenson 
did not forget his native Canada and above all his native 
province. In 1959, he became Chairman of the Manitoba 
Economic Advisory Board. 'He is a great Canadian/ John 
Pepper one of his closest war-time and business associates, who 
succeeded him as Chairman of World Commerce has said, 
'and has done more than any other man in the world's markets 
to bring Canada's enormous potential to the notice of inter 
national investors. 5 

Stephenson lost one great friend at this time, which was a 
grievous blow to him, when the 'animating, heart-warming 
flame', which had won Sir Winston Churchill's admiration, 
was extinguished. On February 8 5 1959, General William 
Donovan died at the Walter Reed Military Hospital in 
Washington. Besides their intimate war-time association, 
'Big Bill' and 'Little Bill' had worked together in the formation 
of the World Commerce Corporation and they had continued 
to keep in touch during the difficult post-war years, when 
Donovan undertook fresh assignments overseas. For instance, 
Donovan had headed the committee formed by newspapermen 
to investigate the slaying in Greece in 1948 of George Polk, a 
C.B.S. correspondent. In this case, which had distinct political 
undertones, a Greek Communist was sentenced to life imprison 
ment and two others were sentenced to death in their absence. 
After a full investigation, Donovan had declared himself 
satisfied with the result. 'We must have peace by compulsion/ 
he said, on returning to America after witnessing the Berlin 
air lift. 'We must counter the Soviet subversive war by being 
strong enough.' 

Later, in 1953, President Eisenhower had appointed Mm 
U.S. Ambassador to Thailand, where he served for two years, 
and materially contributed to the strong policy which arrested 



242 

the Communist advance in South-East Asia at that time. It 
was typical of Urn that he accepted this dangerous and difficult 
task at the age of seventy, although he had earlier declined an 
ambassadorial post of the first rank. He was also chairman of 
the American Committee on United Europe, and in November 
1956 he organized a refugee relief campaign which raised 
$1,500,000 to aid the Hungarians who had risen in revolt 
against the Soviet domination of their country. 

Donovan's greatest feat was O.S.S. 'You may well have 
satisfaction in the achievements of the office and take pride in 
your own contribution to them, 5 President Truman had 
written to Donovan on the day O.S.S. was abolished by 
Presidential Executive Order (September 20, 1945)- 'Great 
additional reward for your efforts should be in knowledge 
that the peace-time intelligence services of the Government 
are being created on the foundation of the facilities and 
resources mobilized through the Office of Strategic Services 
during the war. 9 The outcome, of course, was the Central 
Intelligence Agency, and none watched the growth of C.I. A., 
particularly under the expert guiding hand of Allen Dulles, 
with closer attention and with a greater sense of pride, than 
Bill Donovan and Bill Stephenson. 

It was natural that Stephenson should have an occasional 
nostalgia for his "cloak-and-dagger* days. But this has merely 
sharpened his appreciation of the overwhelming importance 
of intelligence in the contemporary world. 

As a whole, Intelligence operations consist less of the blood- 
chilling adventures we read about than of hard work, endless 
patience, highly developed technical skills, and infinitely 
careful and competent organization/ he has recently said. 
'War has become a thing of instantaneous combustion, en 
gulfing civilian and soldier alike. Surely it is plain that against 
enemy attack today, the first defence must be information: to 
find out when and where an aggressor intends to strike. That 
is the role of Secret Intelligence, and without it all other means 
of defence could prove to be of sadly limited avail. 3 

Thus, with singular and unerring perception, Sherwood's 
quiet Canadian, Sir William Samuel Stephenson, epitomized 
his own secret service story and the reason why it deserves to 
be remembered. 



2 43 

Today Stephenson lives mostly in New York, while he pays 
periodical visits to Canada and the West Indies to keep in 
touch with his business interests there. Much of his time he 
spends in the study of his New York apartment overlooking 
the East River and the United Nations headquarters, which 
my friend Ian Fleming has described in his Foreword to 
this book. 

There is little that I can usefully add to Mr. Fleming's 
characteristic description of this room, except possibly a brief 
reference to one of its furnishings. This is the desk chair which 
the quiet Canadian uses. It once belonged to Kaiser William II 
and had been presented to him by the Mayor of Doom, the 
Dutch town where the last German Emperor spent his exile 
after the First World War. Some years ago it came up for 
auction at the Parke-Bernet Galleries, and Stephenson bought 
it. For him this historic relic may be a not wholly inappro 
priate vehicle from which to evoke memories of two world wars 
as well as to attend to the business of the day. For like the late 
Sir William Wiseman, his predecessor as British intelligence 
chief in the United States in the first war, the quiet Canadian 
has chosen to remain in the country, the preservation of whose 
good relations with Britain is nearest to his heart. 

In conclusion, I should like to quote three tributes, which 
have recently been paid to Stephenson and his official work. 
Two come from American sources and one from British. 

The first is from the Hon. David Bruce, United States 
Ambassador to Great Britain: 

His American friend, the late General William J. Donovan, 
did not exaggerate when he said that British Security Co 
ordination was built from nothing into the greatest integrated, 
secret intelligence and operations organization that has ever 
existed anywhere. 

It was Stephenson' s conviction, months before Pear! Harbor, 
that the United States should possess a similar organization 
for use abroad. He hoped it would be headed by his friend. 
To achieve this end, he brought, through subtle influences, 
the merits of such a proposal to the attention of President 
Roosevelt. . . . 

At the end of the war, Donovan acknowledged his obligation 
to Stephenson, 'whose friendship, knowledge and continuing 



244 

assistance, 9 he said, 'contributed so richly to the establishment 
and the maintenance of an American Intelligence Service in 
World War II.' 

I myself testify, as a subordinate of Donovan's, that I could 
not have carried on my own particular duties with even a 
tolerable measure of success, had it not been for the gen 
erous counsel and unremitting support of Stephenson and his 
officers. . . . 

I feel profoundly that my country owes Sir William Stephen- 
son a permanent debt of gratitude and respect. 

The second tribute comes from the British woman agent, 
whom I have called Cynthia. This is what she wrote to me 
after reading the foregoing pages: 

My heart sings because at last someone has written about 
this remarkable man. I am so glad that, through you, his 
infinite qualities will survive as a public example, instead of 
being buried in the dossiers of the Foreign Office. Your book 
should be a bible for his successors and an inspiration for those 
who may choose to serve through Secret Intelligence. He is a 
rare human being, and I am completely honest and objective 
in saying that without him and the magnificent organization 
which he built up, I personally could have accomplished 
nothing at all. 

The final tribute has been offered by Ernie Cuneo, who was 
the dynamic link between Stephenson and the White House 
during the principal period of this narrative. c lf it had not been 
for Stephenson and his organization in the U.S.A., there 
would have been many more "gold star" mothers in America 
at the end of the war.' 



SO URGES 

THE principal authority used in writing this book has been Sir 
William Stephenson's official and private papers, supplemented by 
my own correspondence and personal recollections. 

The only account of the man and his work, which has hitherto 
appeared in print, is an article by McKenzie Porter ("The Biggest 
Private Eye of All") in Maclean's Magazine (Toronto), December i, 

i95 2 - 
The following printed works have also been consulted: 

ALSOP, STEWART, and BRADEN, THOMAS. Sub Rosa. Reynal and 
Hitchcock, New York, 1 946. 

BUTLER, J. R. M. Lord Lothian. St. Martin's Press, New York, 1960. 

CHURCHILL, SIR WINSTON S. The Second World War. 6 vols. Houghton 
Mifflin, Boston, 1948-53. 

COLVIN, IAN. Master Spy. McGraw-Hill, New York, 1951. 
COWARD, NOEL. Future Indefinite. Doubleday, New York, 1954. 
DALTON, HUGH. The Fateful Tears. Saunders, New York, 1957. 
DE GRAMONT, SANCHE. The Secret War. Putnam, New York, 1962. 

DE JONG, Louis. The German Fifth Column in the Second World War. 
University of Chicago Press, Chicago, 1956. 

DRIBERG, TOM. Beaverbrook. Weidenfeld & Nicolson, London, 1956. 
GOUZENKO, IGOR. Iron Curtain. Button, New York, 1948. 
GUNTHER, JOHN. Roosevelt in Retrospect. Harper, New York, 1950. 

HALL, H. DUNCAN. North American Supply. H.M. Stationery Office 
London, 1955. 

HULL, CORDELL. The Memoirs of Cordell Hull. 2 vols. Macmilian, 
New York, 1948. 

LEAHY, WILLIAM D. / Was There. McGraw-Hill, New York, 1950. 
LEASOR, JAMES. War at the Top. Michael Joseph Ltd., London, 1950. 
LEVERKUEHN, PAUL. German Military Intelligence. Praeger, New York, 
1954- 

245 



246 

LOCKHART, SIR R. BRUCE. Comes the Reckoning. Putnam, London, 

1947- 
Friends, Foes and Foreigners. Putnam, London, 1957. 

MASCHWITZ, ERIC. No Chip on my Shoulder. Herbert Jenkins, London, 
*957- 

MEDLICOTT, W. N. The Economic Blockade. 2 vols. H.M. Stationery 
Office, London, 1952-59. 

MOOREHEAD, ALAN. The Traitor s. Scribner, New York, 1952. 

ROOSEVELT, ELLIOTT. F.D.R.: His Personal Letters. Vol. Ill (1928- 
1945). Duell, Sloan & Pearce, New York, 1950. 

SHERWOOD, ROBERT. Roosevelt and Hopkins, An Intimate History. 
Harper, New York, 1950. 

STIMSON, HENRY L., and BUNDY, McGEORGE. On Active Service in 
Peace and War. Harper, New York, 1948. 

TULLY, ANDREW. CIA. The Inside Story. Morrow, New York, 1962. 
WELLES, SUMNER. Seven Major Decisions. Harper, New York, 1 95 1 . 

WHITEHEAD, DON. The F.B.L Story. Random House, New York, 

I95 6 - 
WILLERT, SIR ARTHUR. The Road to Safety. Verschoyle, London, 

1952- 

WINANT, JOHN G. A Letter from Grosvenor Square. Hodder & Stoughton, 
London, 1947. 

WOODWARD, SIR LLEWELLYN. British Foreign Policy in the Second World 
War. H.M. Stationery Office, London, 1962. 



INDEX 



Abetz, Otto, 96 

Abwehr (German intelligence ser 
vice), 68-69, 8 3> 220, 223 

Acheson, Dean, 38 

Acres, Henry G., 15 

Afifi, Sheikh Youssef, 189 

Aga Khan III, 14, 15 

Aguirre, President, of Spain, 216- 
217 

Aircraft Production, Ministry of, 

29 

Aitken, Max, 49 

Albert, Heinrich, 71 

Algeria, 148 

Allen, Robert S., 205 

Alonso, Manuel, 80, 81 

Alpha Cement, 14 

Alsop, Joseph, 18 

Alsop, Stewart, 156, i68w., 175^., 
176*2., 177*. 

America First organization, 72, 
73-74, 88, 89-90 

American Committee on United 
Europe, 242 

American I.G. Chemical Corpora 
tion, 125 

Amiens, 8 

Ansensio, General Jose", 215 

Anzio, 228 

Argentina, 129, 134, 148, 201-202, 
212, 214, 218 

Argyle High School, Winnipeg, 
6-7 

Arpels, Louis, 99 

Ashenden (Maugham), 17 

Astor, Vincent, 99 

Australian Broadcasting Commis 
sion, 1 60 

Ayer, A. J., 182 



Baker, Professor T. Thorne, 12 
Baltimore, 66-67 



Bankers' Trust Company, 172 

Barnes, Joseph, 197 

Bfarn (French aircraft carrier), 

in 

Beatty, Sir Chester, 240 
Beaverbrook, Lord, 7, 29, 40, 48-50, 

67-68, 184, 238 
Beck, General, 78 
Belgium, 29 
Belgrade, 45-46, 220 
Bell, Walter, 182 
BeLmonte, Major Elias, 140-144 
Benoit (Chief of Codes), 115, 

116-117 

Bensaude, Jose", 172 
Benson, Sir Rex, 238 
Berle, Adolf, 123, 164, 165-166, 192 
Bermuda, 39, 51 ; censorship station^ 

5i 55-5 6 > 79-# * > &6, 87, 90, 9 1, 

96-97, 124, 133, 136, 214, 215, 

221 

Berne, 176 

Bertrand-Vigne, Colonel Georges, 

99, 101 
'Bestrand, Captain*, 108-110, 115 

116, 117, 118-120 
Bhopal, 15 

Bhopal, Nawab of, 14, 15 
'Bicycle* (double agent), 220222 
Biddle, Francis, 92, 192, 205 
Black Record (Vansittart), 159 
Boehmler, Lucy, 85 
Bohny, Commander, 221 
Bolivia, 140-144 
Borchardt, Paul, 84-85 
Bordeaux, 179 
Boris, King, of Bulgaria, 45 
Boston (Mass.), 157 
Bouverie, Barty, 181 
Bowes-Lyon, Hon. (later Sir) David, 

170-171 
Braden, Thomas, 156, 168 ., 175 ., 

17611., 17712. 



247 



248 



Index 



Brazil, 53, 131-132, 133, 139, 141, 
144-148, 179, 222 

British Broadcasting Company (now 
Corporation), 10-11 

British Imperial Censorship, 51, 55. 
See also Bermuda 

British Match Corporation, 17 

British Security Co-ordination see 
B.S.C. 

Brousse, Captain Charles, 101 

Brownsville, Texas, 127 

Bruce, David, 243 

Bruening, Dr., 168 

Bryce, Ivor, 181 

B.S.C. (British Security Co-ordina 
tion), passim*, establishment of, 
50-52, 58-59, 60, 62; anti- 
sabotage inspections, 64-68, 69; 
economic warfare, 121-134; liai 
son with C.O.I., 153, 154, 155, 
156, 160-161; radio services, 
157-160; strained relations with 
F.B.L, 163-167; liaison with 
O.S.S., 171-174; staff of, 181- 
183; and fifth-columnists, 195- 
198; contact with foreign exiles, 
2 1 1 ; wound up, 236 

Buchalter, Louis (Lepke), 200-201 

Buenos Aires, 129, 132, 134, 142, 
179, 211, 212, 218, 224 

Bulgaria, 45, 78, 238 

Bullitt, William, 31 

Bundy, McGeorge, 33 ., 39 n. 

Butler, J. R. M., 39 n. 

Buxton, Colonel Edwin, 154, 168, 
237 

Campbell, Sir Ronald, 208-209, 2I 

Canada, 4, 5-7, 10-11, 51, 97, 113, 
124-125, 135-137, 156, 181, 222, 
226-228, 229-235, 241 

Canadian Broadcasting Corpora 
tion, 135 

Canaris, Admiral Wilhelm, 68-69, 
70 

Cape Matapan, 107 

Caracas, 132, 215, 216 

Caribbean Cement Company Lim 
ited, 239 

Caribbean Sea, 39 



Caroe, Sir Olaf, 209 

Carr, Sam (Schmidt Kogan), 233 

Gartoux, Maurice, 99 

'Cash and Garry*, 27 

Catalina Ltd., 14 

Celler, Emanuel, 203 

Central Intelligence Agency 

(C.I.A.), 176-177, 178, 242 
Century Group, 73 
Chamberlain, John, 175 n. 
Chamberlain, Neville, 16, 24, 27, 

28-29 
Chambrun, Count and Countess 

Rene" de, 95-96 
Chandler, Albert B., 209, 210 
Chase National Bank, 121 
Chateau Thierry, 8 
Chautemps, Camille, 103 
Chicago Daily Mews, 41 
Chief of Intelligence (Colvin), 68 n. 
Chile, 134, 136, 148 
Churchill, Sir Winston, 2, 16-17, 

19, 20-21, 23-24, 29-30, 31, 32, 

36, 37-38> 39> 42-43> 44> 45, 4&> 
49, 67-68, 94, 112, 113, 114-115, 
152, 159, 179, 183, 184-186, 187, 
193, 208 n., 210, 241 

C.I.A. (Central Intelligence 
Agency), i76-i77> ^7^ 242 

C.lJl.: The Inside Story (Tully), 
1 77 . 

Clemm, Werner von, 126-127 

Cleveland, 191 

Go-ordination of Information see 
C.O.I. 

Gochabamba, 142, 143 

C.OJ. (Co-ordination of Informa 
tion), 153-156, 159-162, 163-165, 
167-169, 197 

Coit, Richard, 181 

Colombia, 132, 148 

Colonna, Prince, 108 

Colvin, Ian, 68 n. 

Comes the Reckoning (Lockhart), 
17071. 

Consular Security Officers, 64-66 

Contraband Control, British Board 

o97 

Coppola, Commandante Vincenzo, 
145-147 



Index 



249 



Correa, Mathias, 86 
Goughlin, Father, 197-198 
Coward, Noel, 187-188, 238 
Cox-Cavendish Electrical Company 

Limited, n 
Cuneo, Ernest, 26, 283, 184-186, 

191, 192, 193, 243 
Cunningham, Admiral (now Vis 
count), 44, 107 
Cvetovic, Dr., 46 
'Cynthia', 105-110, 115-120 
Czechoslovakia, 136, 191 



Daily Mail, 12-13 

Dakar, 101, 112, 113 

Dalton, Dr. Hugh (later Lord), 29, 

121, 125, 151, 237 
Darlan, Admiral, no 
Davis, Elmer, 169 
Dawson, Eugene, 15 
De Gramont, Sanche, 178 n. 
De Jong, Louis, 69 n., 70 n., 72 n,, 

1347?., 14872. 
De Wohl, Louis, 189-191 
Deakin, F. W. D., 182 
Denmark, 66-67 
Dennett, Prescott, 89, 92 
Dewey, Thomas E., 193-194, 200- 

201 

Diamond Syndicate, 240-241 
Diamonds are Forever (Fleming), 241 
Diary with Letters, A (Jones), 48 n. 
Dickinson, Velvalee, 214-215 
DieckhofF, Dr. Hans Heinrich, 90, 92 
Dies, Martin, 134 
Dill, Field-Marshal Sir John, 48 n. 
Dollfuss, Engelbert, 127, 128 
Donovan, General William, 2, 4, 5, 

34-41, 42, 43-47> 49> 73* 79> *5o, 

151, 152-156, 159-162, 163-169, 

171-180, 191, 192, 217, 220, 

236-2375 238, 241, 242 
Drew-Brook, Thomas, 7, 8, 9, 183 
Driberg, Tom, 49 n., 50 
Dublin, 177, 183 
Dulles, Allen, 176-177, 242 
Dunkirk, 3, 31 
Dunn, John Archer, 240 
Dykes, Brigadier Vivian, 44 



Earls Court Ltd., 14 

Economic Blockade, The (Medlicott), 

20 n. 

Economic Warfare, Ministry of, 

19-20, 21, 29, 97 
Ecuador, 132, 148 
Eden, Anthony (now Lord Avon), 

162, 170, 1 86 

Edgeworth-Johnson, Robin, 15 
Eisenhower, General, 170, 241 
Ellis, Colonel C. H., 182 
Emile Bertin (French cruiser), 1 1 1 
Engels, Alfredo, 221, 222, 223 
Excalibur (U.S. liner), 97 



Fabiani, Martin, 96 

Facts and Figures, U.S. Office of, 

162, 197 
F.B.I., 24-28, 47, 52-59, 69, 70, 7*i 

75, 76, 79, 81-85, 90, 135, *39 

151, 155, 163-167, 200, 212, 214- 

215, 219-222, 223, 225, 228, 234 
F.B.L Story, The (Whitehead), 70 ., 

167 
Federal Bureau of Investigation 

see F.B.L 

Fenthol, Fritz, 141-142 
Fifth Column Propaganda of the Axis in 

the United States, 196-197 
Fight for Freedom Committee, 73 
Finland, 23 
F.I.S. (Foreign Information 

Service), 169 

Fish, Hamilton, 73, 88-90, 92-93 
Fleming, Ian, 18, 238, 241 
Flexner, Dr. Abraham, 48 JL 
Forbes, Courtney, 140 
Ford Company of Cologne, 125 
Ford Motor Company of Detroit, 

125 
Foreign Information Service 

(F.I.S.), 169 
Fort-de-France, Martinique, in, 

113 

Franco, General, 158 
Frank, Louis, 181 
Fraser, Ingram, 181 

Frederick William, German Crown 
Prince, 77 



250 



Index 



Free French Committee, 94, 95, 101, 
103, 110-115 

'Friends of Democracy*, 1 96 

Friends, Foes and Foreigners (Lock- 
hart), 1 68 ., 170 n* 

Fritsch, General Von, 77 

Froelich, Rene, 85 

Fuhrmann, Arnulf, 134 

Future Indefinite (Coward), 188 n. 



G.2 (Military Intelligence Division, 
U.S. War Department), 56, 165, 
220 

Galilean, The, 198 

Gallivare, 20, 24 

Gallup, Dr. George, 193-194, 195, 
198 

Gallup Poll, 193-196 

Gardner, Nadya, 80-8 1, 85, 91-92 

Gaulle, General de, 94, 95, 101, 103, 
in, 112, 114, 115 

General Aircraft Limited, 14 

General Aniline and Film Corpora 
tion, 121, 125, 126 

General Electric Company, 160 

General Radio Company Limited, 

II, 12 

George V, King, 14 

George VI, King, 23, 29, 37, 236 

German Fifth Column in the Second 

World War, The (De Jong), 69 . 
German Library of Information, 

New York, 87, 92 
German Military Intelligence 

(Leverkuehn), 68 n. 
Gienanth, Ulrich von, 73 
Glyn, Ralph (later Lord), 17, 18 
Goddard, Judge Henry W., 85 
Goebbels, Josef, 190 
Goering, Hermann, 75, 78, 190 
Gogarty, Oliver St. John, 183 
Gouzenko, Igor, 4, 230-235 
Gowen, Albert Younglove, 41 
Graf Spee (German battleship), 

201-202 

Grand, Colonel Laurence, 21 
Graz, Charles des, 51 
Greece, 43, 46, 78, 241 
Greek Memories (Mackenzie), 18 



Green Shirts, 198 

Greene, Graham, 18 

Greenslade, Admiral John W., 1 1 2 

Grynzspan, Herschel, 126 

Guadeloupe, 111 

Gubbins, Major-General Sir Colin, 

151 n., 179-180 
Gunther, John, 192 n* 
Gustav, King, of Sweden, 23 
Guthrie, Sir Connop, 62, 63, 64, 66, 

67, 181 



Haider, General Franz, 77 
Halifax, Lord, 23, 24, 48, 49, 50, 67, 

72, 2IO, 213-214 

Halifax (Nova Scotia), 212 
Hall, Duncan, 27 ., 40 n. 
Halpern, Alexander, 182 
Hambro, Sir Charles, 151 ., 238 
Hammer, Ernst, 123 
Hannegan, Robert E., 207 
Hensen-Sturm, Gunther, 73 
Harriman, Averill, 48 
Haushofer, Professor, 85 
Hawaii, 81 
Helsinki, 23 
Henry-Haye, Gaston, 94-95, 96, 

97-98, 100, 101, 102-103, 104, 

108-110, 118, 191 
Herbert, Sir Edwin, 51 
Hess, Rudolf, 190, 191 
Heyer, Herbert Von, 223 
Highet, Gilbert A., 182 
Hill, George, 89-93 
Hill-Wood, William, 51 
Hillowton, Jamaica, 238 
Himmler, Heinrich, 68, 190 
Hirasawa, Mr., 211-212 
Hitler, Adolf, 3, 20, 29, 46, 68, 70, 

74~75> 76, 77-7^ 148, i5> 189, 

191 
Hoare, Sir Samuel (later Lord 

Templewood), 158 
Hohenlohe, Princess Stephanie, 75- 

79 

Holland, 29, 223 
Holt, Senator Rush, 91 
Holzminden p.o.w. camp, 9 
Hong Kong, 162 



Index 



Hoover, Edgar, 1-2, 3, 4, 5, 25-26, 
28, 47, 52-59, 69, 75, 89, 135, 

139-140, 142, 155, 163-167, 200, 
206, 214, 219, 222, 223 

Hoover, Herbert, 34, 35 
Hopkins, Harry, 167, 192, 204, 207 
House on 92nd Street, The (film), 84 
Hoyningen-Huene, Baron von, 92 
Hudson's Bay Company, 6 
*Hueneras, Hoynigero', 92 
Huggins, Sir John, 239 
Hull, Cordell, 39, 43, 44, 48, 94-95, 

100, 102, 108, 114-115, 121, 142, 

144 ., 148, 162, 206, 208-210, 
213-214 

Hyde, H. Montgomery, 79, 86, 96, 
97, 106, 140-141, 182, 183, 199 

I Was There (Leahy), 17611. 

Ickes, Harold, 205 

I.G. Farbenindustrie, 3, 122, 125- 
126, 127 

Illustrious (aircraft carrier), no 

Imperial Defence, Committee of, 19 

India, 15, 208-210 

Industrial Intelligence Centre 
(I.I.C.), 19 

Integralist movement (Brazil), 146, 
198 

Inter-American Abstention Com 
mittee, 127 

International Telephone and Tele 
graph Company, 71 

Ireland, 177 

Ismay, General (later Lord), 112, 
152 

Italy, 52, 107, 144-147, 228-229 

Jackson, Robert, 38 

Jamaica, 188, 238, 239 

Japan, 60, 74, 161-163, *77> '79* 

208, 210, 211-214 
'Joe K. (Kurt Frederick Ludwig), 

79-87 

Jones, Thomas, 48 n. 
Joyce, William, 18 

Karri-Davies, Walter, 181 
Kashmir, 15 



2 5 I 



Kellock, Mr. Justice R. C., 235 

Kennedy, Joseph, 31, 37, 152 
KGEI radio station, 160 
King's Cup air race (1934), 14 
King, Admiral Ernest J., 192 
King, Mackenzie, 94, 230, 235 
Knox, Frank, 33, 34, 36, 38, 39, 40, 

41, 43,44, 176 

Kogan, Schmidt (Sam Carr), 233 
Korda, Sir Alexander, 183-184 
Kurusu, Saburo, 212 
KWID radio station, 160 



La Guardia, Fiorello, 26, 194 
La Paz, 141, 143, 144 
Lady Hamilton (film), 183 
Lahousen, Colonel Erwin, 68, 70 
Lais, Admiral Alberto, 106, 107- 

108 

Lai, Ghamal, 209 
L.A.T.L (airline), 132, 139, 141, 

145-147 
Latin America, 3, 4, 51, 52-53, 54, 

55-58, 65, 123, 129-150, 163, 

1 66, 179, 226 
Laval, Pierre, 94, 103, 104, 106, 109, 

116 

Lazareff, Pierre, 100 
Leahy, Admiral William, 176, 207 
Leasor, James, 28-29 
Leathers, Frederick (now Lord), 

29-30, 66, 184 

Leibrandt, (spy), 223 

Lemmon, Walter, 157, 158 
Lend-Lease, 42, 60, 64, 69, 121, 152, 

172, 192 
Letter from Grosmnor Square, A 

(Winant), 37 . 
Leverkuehn, Paul, 68 n. 
Levetzow, Werner Von, 139 
Levy, Benn, 181, 182 
Life, 175/2. 
Lima, 140 
Lindbergh, Colonel Charles, 35, 

73-74. *9 J 

Liotta, General Aurelio, 145-147 

Lippmann, Walter, 199 

Lisbon, 83, 99, 132, 133, 172, 220, 

221 



252 



Index 



Lockhart, Sir Robert Bruce, 168 n. t 

170 

Londonderry, Lord, 14 
Lothian, Lord, 26, 32, 38-39, 47-48, 

5775 
Ludwig, Kurt Frederick ('Joe K'), 

79-87 

Lufthansa, 146 
Lutyens, Sir Edwin, 48 
Luxembourg, 29 
Lyons, Leonard, 199 
L- , Count de la, 115, 117-118 



McCIoy, JohnJ., 207 
MacDonald, Colonel Beverley, 15 
MacDonald, Malcolm, 234 
MacDonald, Ramsay, 17 
Maclnnes, Helen, 182 
Maclntyre, Marvin, 206 
McKellar, Kenneth, 163 
McKellar Act, 163, 164-165 
Mackenzie, Sir Compton, 17, 1 8 
MacLeish, Archibald, 197 
McNulty, George A., 91, 92 
Madrid, 131, 223 
Maidment, Kenneth J., 182 
Make Europe Pay War Debts 

Committee, 89 
Malaya, 162 
Malaya, H.M.S., no 
Malaya Broadcasting Corporation, 

160 

Maloney, William, 90, 91 
Man Who Never Was, The (Montagu) 

l8 ? 
Manitoba Economic Advisory 

Board, 241 

Mannerheim, Field-Marshal, 23 
M.A.O.R.T., 127 
Markovic, Mr., 46 
Marseilles, 176 
Martinique, 111-113, 190 
Maschwitz, Eric, 135, 181 
Massin, Pierre, 133 
Mathis, Emil, 98 
Matsunaga, Rear-Admiral Toshio, 

161, 162 

Maugham, Somerset, 17, 1 8 
Maurois, Andre", 103-104 



May, Dr. Alan Nunn, 233, 234, 

235 
Medlicott, W. N., 20 ., 121 n., 128, 

134*. 

Men into Beasts (Viereck), 92 n. 
Menzies, Colonel (later Major- 

General Sir) Stewart, 18-19, 21, 

28 

Mers-el-Kebir, 95, 109 
Mexico, 52, 53, 56-58, 69, 100, 149, 

227 

Meyer, Eugene, 209 
M.I.6, 21, 79 
Milan, 228-229 
Military Intelligence Division, U.S. 

War Department (G.2), 56, 165, 

220 

Miller, Colonel Francis P., 73 
Milwaukee, 73 
Miquelon, 113-115 
Mitchell, Hamish, 61 
Mitford, Unity, 78 
Molotov, V. M., 77 
Monospar plane, 14 
Montagu, Commander Ewen, 187 
Montoire, 94 
Montreal, 100, 184, 233 
Morgenthau, Henry, 27, 38, 101, 

121, 205 
Morocco, 148 
Morrell, Sydney, 181, 236 
Morton, Major (later Sir) Desmond, 

19-20, 21, 152 
Mosley, Sir Oswald, 198 
Mountbatten, Lord Louis (now 

Earl), 186 

Mowrer, Edgar Ansel, 41 
Muggeridge, Malcolm, 18 
Murphy, James, 154, 168 
Murray, William Gladstone, 10-1 1, 

135 

Musa, Jean-Louis, 96, 97-102, 131 
Muselier, Admiral Emile, 114 



Nanking, 162 
Narvik, 20, 21, 23, 24 
Natal, 149 

National Maritime Union of Amer 
ica, 6 1 



Index 



2 53 



Naval Intelligence, Office of 

(O.N.I.). 56, 57, 165 

Nea Hellas (Greek steamer), 101 
Nelson, Air Commodore Sir Frank, 

151 
Neutrality Act, 27, 47 

New Statesman, 18 
New York Daily News, 196 
New Tork Herald-Tribune, 18, 41, 
71-72, 85, 100-103, 128, 197, 

199 

New Tork Times, 144 n. 
Newfoundland, 39, 67, 239-240 
Newfoundland and Labrador 

Development Corporation, 239- 

240 

Niemeyer, Hauptman, 9 
N.K.V.D. (Soviet Security Service), 

1 66, 232, 234 
No Chip on my Shoulder (Maschwitz), 

135^ 

Nomura, Kichisaburo, 211, 212 
Norfolk, Virginia, 107, 110 
Normandie (French liner), 65 
North Africa, 114, 115, 148, 172 
North American Supply (Hall), 27 n. 
Northcliffe, Lord, 12 
Norway, 20-21, 23, 24, 28-29 
Norwich, Lord (Alfred Duff 

Cooper), 187 n. 



O'Dwyer, William, 194 

Ogilvy, David, 181, i94-*95> 198, 
236 

On Active Service in Peace and War 
(Stimson and Bundy), 33 n. 

O.N.I. (Office of Naval Intelli 
gence), 56, 57, 165 

Operation Heartbreak (Duff Cooper), 
187 n. 

Oran, 95 

Orlebar, Captain A. H., 7, 14 

O.S.S. (Office of Strategic Services), 
167-180, 220, 225-226, 228, 229, 
242 

Ottawa, 4, 97, 114, 124, 156, 229- 

234 

Ottawa Journal, 231 
Our Man in Hmna (Greene), 18 



O.W.I. (Office of War Information), 
168-171, 228 

Oxelsund, 21 



Panama, 149, 150 

Passport Control Office, 25, 28, 31, 

50, 51, 62 

'Pat y (double agent), 223-225 
Paul, Prince, of Yugoslavia, 45-46 
Pavlov, Vitali, 232, 234 
Pearl Harbour, 60, 73, 74, 81, 155, 

159, 160, 192, 196, 211, 214, 219 
Pearson, Drew, 199, 104-210, 235 
Pelley, William Dudley, 198 
Penaranda, President, of Bolivia, 

140, 144 

Pepper, John, 181, 236, 241 
Pershing, General, 41 
Persian Gulf, 47 

P<tain, Marshal, 94, 95, 103, 104 
Philadelphia, no 
Phillips, Colonel A. M., 182 
Phillips, William, 208-210 
Phrygia (German ship), 57 
Pioneer Import Corporation, 121, 

126-127 

Placentia Bay, 67 
Plan for Predetermining the Results of 

Plebiscites, Predicting the Reactions 

of People to the Impact of Projected 

Events, and Applying the Gallup 

Technique to Other Fields of Secret 

Intelligence, 198 
Playfair, Giles, 181 
Point Douglas, 6 
Poland, 20, 46, 174 
Political Warfare Executive 

(P.W.E.), 151, 170 
Polk, George, 241 
Port of Spain, 212 
Portugal, 80, 81, 172 
Pressed Steel Company, 14, 15, 17 
Psychological Warfare Branch 

(P.W.B.), 170, *9 
Publicity, 198 
Puerto Cabello, 132 

Purchasing Commission, 27, 60, 
61-63, 64, 98, 174 

Purple Heart, Order of the, 89 



254 



Index 



Purvis, Arthur, 27, 61, 62, 64, 67- 
68,98 

P.W.B. (Psychological Warfare 
Branch), 170, 198 

P.W.E. (Political Warfare Execu 
tive), 151, 170 

Qadir, Major Altaf, 209 
Quebec Conference (1944), 179, 210 
Queen Elizabeth, s.s., 65 
Queen Mary, s.s., 65 

Ramirez, President, of Argentina, 
202 

Rath, Ernest vom, 126 

Rath, William vom, 126 

R.C.M.P. (Royal Canadian Moun 
ted Police), 51, 135, 212, 229-235 

Recollections of a Picture Dealer (Vol- 
lard), 97 n. 

Red Sea, 47 

Rckowski, (German agent), 69 

Repulse, H.M.S., no 

Research and Analysis Branch, 
O.S.S., 169, 178-179 

Reynaud, Paul, 32, 103 

Ribbentrop, Joachim von, 69, 75, 
76, 78, 126 

Richtofen, Lpthar Von, 8 

Rieth, Dr. Kurt Heinrich, 127-128 

Rintelen, Captain Von, 69 

Rio de Janeiro, 53, 131, 132, 133, 
145, 146-147, 221; Conference 
(Jan. 1942), 139, 144, 147, 163 

Road to Safety, The (Willert), 63 n. 

Robert, Admiral Georges, 1 1 1, 113, 
190-191 

Robertson, Norman, 229-230, 234 

Rockfort, Jamaica, 239 

Roosevelt, Franklin D., 4, 26-27, 
30, 31, 32-36, 37-40, 4i-43> 45- 
47 49-50, 54, 67, 72, 94, 99, 100, 
115, 128, 134, 140, 142, 150, 152, 
153-154, 159, 164, 178, 179, 186, 
191-194, 197, 201, 202, 203, 204, 
206-207, 208 ., 210, 213 

Roosevelt, James, 213 

Roosevelt in Retrospect (Gunther), 

192 J2. 



Roosevelt Letters, The, 35 n. 
Rose, Fred, 233, 235 
Rosenman, Judge Samuel, 194 
Rothermere, Lord, 76, 78 
Royal Canadian Engineers, 7 
Royal Canadian Flying Corps, 7-9 
Royal Canadian Mounted Police 
(R.C.M.R), 51, 135, 212, 229- 

2 35 

Royal Flying Corps, 7, 8 
Russia, 45, 58, 61, 77, 132, 166, 191, 

192, 206, 230-235 



St. Lucia, 1 13 

St. Pierre, 98-99, 113-115 

Salerno, 228 

San Francisco, 74, 76-77, 160 

Sandstede, Gottfried, 150 

Santa Cruz, 142 

Saratoga, U.S.S., 214 

Scheer (German battleship), 43 

Schering, A. G., 122-124 

Schering Corporation of Bloomfield, 

121, 122-124 

Schneider Trophy Race (1929), 14 
Schwarz, Dr. Paul, 92 
Scientific Astrologers, American 

Federation of, 191 
Sealy, Theodore, 239 
Seamen, National Union of, 66 
Sebold, William, 84, 219, 221 
Second World War, The (Churchill), 

16 
Secret Intelligence Service see 

S.I.S. 
Secret War, The (De Gramont), 

17872. 
Security Division, B.S.C., 62-67, 

69 

Seiferheld, David, 193 
Sequel to the Apocalypse, 125-126 
Seven Major Decisions (Welles), 67 n. 
Shaw, Bernard, 92 
Sherwood, Robert, 5, 31 n., 114*2., 
i5 2 > *54 3 169-170, 191, 192, 197, 
204 n., 208 n., 236, 237-238 

Ships' Observer Scheme, 131 
Sichel, Herbert, 181 



Index 



255 



Sicily, 228 

Siyes, Count Jacques, de, in 

Sillitoe, Sir Percy, 241 

Simmons, Mary French (Lady 
Stephenson), 13, 31, 237, 238 

'Simon, Andre', 104 

Simovic, General, 46 

Singapore, 160 

S.I.S. (Secret Intelligence Service), 
17, 1 8, 24, 26, 28, 50-51, 54, 55, 
103, 151, 175, 198, 225 

Smallwood, Joseph, 240 

Smuts, Field-Marshal, 223 

S.O.i, 21, 29, 151 

S.O.2, 21, 29, 151 

Social Justice, 197 

S.O.E. (Special Operations Execu 
tive), 145, 151, 172, 173, 175, 
179-180, 225, 228, 229 

Sofia, 45 

Solbert, Colonel, 162 

Sound City Films, 14 

South Africa, 222, 223, 240 

South America see Latin America 

South Carlton (Lines.), 7 

Southborough, Lord, 15 

Spaatz, Lt.-Colonel (later General), 
Carl, 37 

Spain, 78, 80, 131, 158, 177, 198, 
215-216, 223, 224 

Special Operations Executive see 
S.O.E. 

Spencer-Jones, Dr. H., 191 

'Springbok* (double agent), 222- 
223 

Stalin, Josef, 78, 208 n. 

Standard Oil Company of New 
Jersey, 125, 126, 127, 128, 145 

Station M, 135-14? 

Stephenson, Sir William: birth and 
early years in Winnipeg, 5-7; 
proficiency in boxing, 5, 6, 8, 13; 
education, 6-7; in France with 
Royal Canadian Engineers, 7; 
transfers to Royal Flying Corps, 
7 ; amateur light-weight champion, 
8, 13; shot down, 8-9; at Holz- 
minden prison camp, 9; escapes, 
9; foresees commercial wireless 
and television, 10-12; buys 



Stephenson contd. 

interest in radio companies, n; 
wireless inventions, 11-13; mar 
ries, 13; commercial interests, 13, 
14, 17; wins King's Cup air race 
(1934), 14; business trips abroad, 
14-15; reports to Churchill on 
German rearmament, 16-17; first 
contact with S.I.S., 17, 18-19; 
plan to sabotage German ore 
shipments, 21-23; * n Finland, 23; 
secret mission to U.S., 24-28; 
meets Hoover of F.B.I., 25; 
establishes contact between F.B.L 
and S.I.S., 25-28; returns to New 
York as Passport Control Officer, 
30, 31-32; renews contacts with 
Donovan, 34, 35-36; and negotia 
tions for American aid, 36, 38-44; 
establishes B.S.C., 47-59; urges 
appointment of Beaverbrook as 
Ambassador, 48-49; liaison with 
Imperial Censorship, 51-52, 55; 
and with F.B.I., 52-59; takes over 
Security Division, 62-63; anti- 
sabotage measures, 64-68, 69; 
measures against enemy propa 
ganda, 73-74, 87-93; exposes 
Vichy French activities, 97-110; 
investigates enemy commercial 
interests, 122-134; anti-smuggling 
measures, 129-134; creates 
Station M for fabricating letters 
and documents, 135; frustrates 
Bolivia coup, 140-144; closes down 
L.A.T.I. airline, 144-147; dis 
covers Hitler's plans for Latin 
America, 148-150; 'manoeuvres* 
Donovan into C.O.I., 152-153, 
154; co-operates with C.O.I., 155, 
156, 160-161; strained relations 
with F.B.L, 163-167; liaison with 
O.S.S., 171-174, 179; his tribute 
to it, 176-177; staff and outside 
helpers of, 181-184, 187-188; trip 
to England with Cuneo, 184-186; 
flies over invasion coast on D-day, 
1 88; uses astrology in propaganda, 
189-191; knowledge of internal 
U.S. politics, 191-198; forecasts 



256 



Index 



Stephenson contd. 

Presidential election results, 192- 
194; and fifth-columnists, 195- 
198; relations with American 
press, 199-210; penetrates Japan 
ese and Spanish diplomacy, 211- 
217; uses double agents, 217-225; 
recruits and trains agents, 225- 
229; and Gouzenko case, 230- 
235; winds up B.S.C., 236; 
knighted, i, 236; awarded Presi 
dential Order of Merit, 2, 236- 
237; Dalton's tribute, 237; goes 
to live in Jamaica, 238; com 
mercial activities, 238-241 

Stephenson, Lady (Mary French 
Simmons), 13, 31, 237, 238 

Sterling Products Inc., 125, 126 

Stettinius, Edward, 238 

Steuben Society, 88 

Stimson, Henry L., 33, 36, 38, 43, 
44, 162 

Stockholm, 22-23, 2 4 

Stone, Chief Justice, 91 

Stone, Thomas Archibald, 229, 234 

Stopford, R. J., 128 

StoyanofF, Alexander, 225 

Stragnell, Dr. Gregory, 123, 124- 
125 

Strategic Services, Office of see 
O.S.S. 

Strong, General George, 166 

Sub Rosa (Alsop and Braden), 
156 n. 

Suez, 47 

Supermarine Special plane, 14 

Supply, Ministry of, 174 

Survey of Foreign Exports, O.S.S., 

i 7 8 

Sweden, 17, 20, 21-24, I22 
Sweet-Escott, Bickham, 181 
Swiss Bank Corporation, 123, 124 
Switzerland, 122, 124 



Taylor, Edmond, 197 
Teagle, Walter, 127, 128 
Teheran Conference (1943), 208 n. 
Telfer-Smollett, Major-General 

Alexander, 182 
Thailand, 241-242 
Thermann, Freiherr Edmund Von, 

150 
This Was My Choice (Gouzenko), 

230 n. 

Thyssen, Fritz, 20 
Times, The, 150/1., 171 
Toronto, 227, 228 
Treasury, U.S., 172-174 
Trinidad, 132, 134, 212 
Truman, Harry S., 2, 5, 236, 242 
Tuliy, Andrew, 177 n. 
Tunney, Gene, 5, 25 
Twyford, 12 



Uruguay, 134 



Vansittart, Sir Robert (later Baron), 

159 
Vargas, President Getulio, of Brazil, 

146, 147 

Vauzanges, Jacques, 111-113 
Venezuela, 129, 131, 132, 148, 

216-217 
Vera Cruz, 56 
Viereck, George Sylvester, 90-93, 

196 

Viereck, Louis, 90 
Vik game, 138-139 
Villarroel, Major Guaiberto, 144 
Vining, Charles, 183 
Vollard, Ambrose, 97 n, 
Von der Osten, Carl Wilhelm, 

82-83 
Von der Osten, Captain Ulrich, 

82-83, 84 



Talbert, Ansel E., 101 
Tampico, 56, 57, 58 
Taranto, 107 

Taschereau, Mr. Justice Robert, 
235 



Wallace, Henry, 192 

War at the Top (Leasor), 28-29 

War Information, Office of 

(O.W.I.), 168-171, 228 
War Transport, Ministry of, 30 



Index 



25? 



Washington Merry-Go-Round (Pearson 

and Allen), 205 
Washington Post, 209 
Water on the Brain (Mackenzie), 17 
Watkins-Mence, Charles, 85, 86 
Wavell, Lord, 44 
Weidemann, Captain Fritz, 74-79 
Welles, Sumner, 32, 38, 39, 66-67, 

100, 144, 148 n. 
Weltzien, Julius, 122, 124 
Wendler, Dr. Ernst, 142, 143, 144 
West Point, U.S.S., 128 
Western Union Cable Company, 

98-99 
Westrick, Dr. Gerhard Alois, 70-71, 

127 

Wheeler, Burton K., 35, 42 
Wheeler-Bennett, Sir John, 168 
White House Papers of Harry Z. 

Hopkins (Sherwood), 31 n., 238 
Whitehead, Don, 70 ., 167^., 

21572. 
Who's Who Among the War Mongers 

(Holt), 91 

Willert, Sir Arthur, 63 n. 
Willkie, WendeU, 38 



Willsher, Kathleen Mary, 233-234 

Winant, John G., 3772., 152, 170 
Winchell, Walter, 137-138, 199- 

204, 205, 206, 207 
Winnipeg, 5-7, 10 
Wiseman, Sir William, 63, 69, 75, 

76-79, 238, 243 
Woburn Abbey, 151 
Wood, George, 176-177 
Woodward, Sir Llewellyn, 148 . 
World Commerce Corporation, 

238-239, 241 
Wren, Christopher, 181 
Wren, Walter, 181 
WRUL radio station, 157-160 

X-Ray, 198 

Yokoyama, Ichiro, 214 
Yugoslavia, 45-46, 7&, 238 

Zabotin, Colonel Nicolai, 231, 233, 

235 
Zemun, 46 



(continued from front flap) 

organization who knows him intimately. 
The result is a unique picture of the 
British Secret Service in action and of 
the remarkable exploits of its brilliant 
but personally unobtrusive chief in the 
United States. 

At the end of the war, J. Edgar Hoo 
ver, with whom Stephenson worked 
closely, wrote to him: "When the full 
story can be told, I am quite certain that 
your contribution will be among the fore 
most in having brought victory finally to 
the united nations' cause." Now it can 
be told; Room 3603 is the full story. 

Ian Fleming's delightful Foreword 
adds this information: "Bill Stephenson 
worked himself almost to death during 
the war, carrying out undercover opera 
tions and often dangerous assignments 
(they culminated with the Gouzenko 
case that put Fuchs in the bag) that can 
only be hinted at in the fascinating book 
that Mr. Montgomery Hyde has, for some 
reason, been allowed to write the first 
book, so far as I know, about the British 
secret agent whose publication has re 
ceived official blessing/* 



Jacket design I . ' Milton Closer 



FARRAR, STR/i 1 J S AND COMPANY 
19 Union Square ; T est, New York City 3 



ss 




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